A commercial bank is a financial institution that offers services such as accepting deposits, offering checking and savings account services, and offering loans and credit facilities.
Commercial banks make a profit by lending money to individuals and businesses and earning interest. These banks give out various types of loans like business loans, education loans, personal loans, etc., and are crucial to the economy.
In this article, we will explore the various functions of a commercial bank and their importance in our economy.
Commercial banks perform functions that are essential to the financial system. These functions are categorized into primary and secondary functions.
Commercial banks are of three types:
Private banks are commercial banks that are owned by private individuals or corporations. The majority of the share capital of a private bank would be owned by non-governmental entities.
These banks are known for their customer service, technology-driven services, and competitive interest rates.
Examples: HDFC Bank, ICICI Bank, Axis Bank, etc.
Public banks are owned and operated by the government. They often have a large network of branches and are involved in implementing government financial policies.
Examples: State Bank of India (SBI), Bank of Baroda, Punjab National Bank, etc.
Foreign banks are international banks that operate in a foreign country. These banks offer services similar to domestic banks but are often involved in international trade and foreign exchange.
Examples: Citibank, HSBC, Standard Chartered Bank, etc.
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Commercial banks are important to the financial system. They help the economy by accepting deposits and providing loans. These banks offer various other services such as fund transfers, wealth management, and credit cards, to support individuals and businesses alike.
Commercial banks not only support individuals and businesses but also contribute to the economic growth and stability of the nation.
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The four main types of commercial banks are public sector banks, private sector banks, foreign banks, and regional rural banks.
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Disclaimer
The starting interest rate depends on factors such as credit history, financial obligations, specific lender's criteria and Terms and conditions. Moneyview is a digital lending platform; all loans are evaluated and disbursed by our lending partners, who are registered as Non-Banking Financial Companies or Banks with the Reserve Bank of India.
This article is for informational purposes only and does not constitute financial or legal advice. Always consult with your financial advisor for specific guidance.
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