1.

Explain how can financial institutions fuel economic development during

current situation.

Financial institution help the economy in mobilizing the funds from the
surplus sector to deficit sector. Being an intermediary, it helps the investors or
depositors to earn income like interest income and other gains; and the debtors
to raise their capital or resources. Their role is very important especially in our
current situation. Today, the whole world is grappling with COVID 19 pandemic
because it is not just a health crisis but also an unprecedented socio-economic
crisis. Each country has to limit its economic activities to contain the spread of
virus which affects the flow of money in the financial system.
During lockdown, all financial institution like banks have provided the
borrowers a grace period to pay for their loans. It is very helpful because most of
us could not pay for debts because of limited source of income. Everyday is
actually a fight which everyone should survive in health and financial problems.
Thus, the debt restructuring of financial institutions are very favorable for all of
us. Moreover, these financial institutions help the businesses by providing them
loan to start again their operation and gradually recover their losses. The
pandemic actually causes the different businesses to incur losses because of
lesser customers and higher expenses due to extensive sanitation. Small and
medium enterprises are the businesses that are highly devastated because most
of them depend on income from day-to-day transactions. Therefore, the role of
financial institution is vital to help these businesses.