A sound banking system contributes to the prosperity of the country and no modern economic system can function properly without banking services. The banks are important economically because they provide the means of attracting and collecting savings through various types of accounts they offer and their extensive branch net work. By assuming the risk of loss they attract savings from all types of customers small or large, near or far.

The banks do not only act as receivers of variables such as hand to hand money but also other variables such as certificates, policies and provide subsidiary income in the form of interest on deposits.

By lending out money so collected, they act as intermediaries between lenders and borrowers. They relieve the saver the risk of loss while at the same time providing credit for trade, industry and consumption.

The provision of finance to business encourages enterprise and leads to the provision of extra jobs, increased production and less _h reliance on the import of foreign goods.

Lending to personal customers on the other hand, stimulates demand for goods, which again helps to increase production and create more jobs. The banks do not only lend out the money they have collected from private and public savers but they also create money. They do this by providing advances or lending out more than that they have collected.

Banks also provide cash when, where and in the form it is required by their customers for various purposes. They provide over-drafts, personal loans, bringing loan or temporary loans and farming advance.

Banks also provide a safe, economic and convenient payment mechanism to permit an efficient method of payment of debts by one person to another. The use of cheques, bank drafts, telegraphic transfers, direct debting and standing orders and such other methods of payment enable trade and industry to function more efficiently. By extending the credit and payment system internationally through links with banking system over-seas, the banks facilitate international trade and investment.  

Banks are also willing to give advice such as suggesting suitable investment, suitable buyers and suppliers to their customers. They provide a variety of other services such as reports on economic, financial and political conditions all over the world, making inquiries on firms and individuals with whom their customers wish to trade and act as referees.

Some banks, such as development banks, offer additional services to their customers such as feasibility studies, research, education and insurance over.