What are Commercial Banks?
Commercial Banks are financial institutions that provide a range of banking services to individuals, businesses, and organisations. They are profit-oriented entities that operate on a commercial scale. Commercial banks play a crucial role in the economy by facilitating financial transactions, promoting economic growth, and channelling funds between savers and borrowers.
The primary functions of commercial banks include:
- Deposits
- Lending
- Payment Services
- Foreign Exchange Services
- Investment and Advisory Services
- Trade Finance
Commercial Banks are subject to regulatory oversight by central banks, financial regulatory authorities, and banking regulators. They are required to maintain adequate capital reserves; adhere to regulations regarding liquidity, risk management, and consumer protection; and follow anti-money laundering and counter-terrorism financing guidelines.
Commercial Banks serve as an intermediary between savers and borrowers, promote economic activity, facilitate financial transactions, and provide essential banking services to individuals and businesses.
Difference between Commercial and Cooperative Banks
Commercial Banks and Cooperative banks are two types of financial institutions that offer a range of financial services to their customers. Commercial Banks works for profit motive whereas Cooperative banks are established based on the principles of cooperation.
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