Commercial banks in India perform the core intermediation function of mobilizing deposits and extending credit. This intermediation is economically important because it:

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Economics · Banking System

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channels savings into productive investment and supports payment and credit systems

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Answer 1

prevents all forms of systemic risk in finance

Answer 2

replaces the need for monetary policy

Answer 3

channels savings into productive investment and supports payment and credit systems

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eliminates the need for capital markets in the economy

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