Even today, in the rural unbanked areas of the country, people are dependent on money lenders for credit. Moreover, when people had to save, they used to hoard money in their houses despite the risk of robbery. The existence of a bank, with its legal sanctity, was a solution to both these issues.
Banks extended loans and advances at affordable interest rates for productive as well as consumption purposes and started accepting deposits from the public. The provision of loans at affordable interest rates helped people smoothen their income and expenditure fluctuations on the one hand and start remunerative economic activity on the other.