Objectives and importance of Bank

Objectives and importance of Bank

Bank has various objectives as per other financial organizations. But banking organization view point is exceptional than others. The objectives of bank can be viewed from three different perspectives:

1) Objective from the view point of Bank owners,
2) Objective from the view point of the government and
3) Objective from the view point of Bank customers.

1. Objective from the view point of Bank owners

i) Earning profit: Profit motive of the owners of the Bank acts as a driving force in engaging themselves in the business of banking like all other business.

ii) Rendering Services: Bank renders various services to the society as a part of their social commitment and this is a prime objective for engaging in banking business. Bankers are not only to make profit but also to do some good to the society.

iii) Investment of fund: The owners of the bank treat the bank as a suitable sector to invest their accumulated saved money.

iv) Earning good will: The owners of bank take bank as a way of earning good will by enhancing the periphery of their banking business.

v) Raising efficiency: The owners sharpen their managerial skill and efficiency by ensuring smooth operation of their banking business.

2. Objective from the view point of the government:

Issuance of Note and currency notes: Government issues notes and currency as a medium of exchange through banks.

Formation of capital: Government always encourages formation of capital in society through households and bank act as a catalyzing force in formation of capital in different sectors of the society.

Investment of capital and industrialization: Bank helps investment of ideal money through its various asset products and expedites industalization. Eventually this helps the growth of GDP, alleviating poverty and ensures equal distribution of wealth.

Control of money market: Bank by its various products help in controlling money market (supply of money in the market) and guards against the economy to be inflated.

Creation of employment : Bank to fulfill its human resource requirements and create a large employment opportunities.

Counseling in financial matters: Banks sometimes put up effective suggestions to Govt in financial matters from their part.

3. Objective from the view point of bank customers:

Safe custodian of public money: Bank acts as a safe custodian of public money. By depositing own money into a Bank account people get rid of worries like theft, burglary and snatching.

custodian of public money: Sometimes bank acts as a financial advisers and counselor to its customers in various aspects.

Representative or trustee: Bank sometimes performs the role of a representative or trustee on behalf of its customers.

Providing credit facility: Bank provides credit facility to its customers and make opportunities to invest in profitable sector and by the process create income opportunities for customers.

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