There are innumerable commercial banks in any country, and these banks have an important contribution in the economic development of that country. In our country India too, government sector commercial banks and private sector commercial banks are functioning, which are considered important institutions for the economic and social development of the country. Come, in this article related to commercial bank i.e. what is the definition of commercial bank? Along with this, we will also know about the meaning, types, functions, importance, purpose of commercial banks in India .
Definition of Commercial Bank
Commercial banks are those financial institutions which, with the aim of earning profit, provide various types of banking services along with accepting deposits of public money and providing loans when needed.
Types of Commercial Banks in India
- Government sector commercial banks – The government has a stake in this type of commercial banks, and the work of control and operation is done by the government only.
- Private sector commercial banks – These banks are owned by private people and the supervision is done by private people only.
- Commercial banks of rural areas – This is a sponsored bank, and its sponsors are public sector banks. Government of India, State Government and public sector commercial banks have stake in this type of banks.
- Foreign Sector Commercial Banks – Those banks which have their branches in India and their headquarters are located in another country, are considered as foreign sector commercial banks.
Functions of Commercial Bank
To accept deposits of public money, it provides banking services like check book, debit card, credit card, loan etc. along with the facility of opening savings account, current account, fixed account, recurring account and other types of accounts.
Objectives of Commercial Bank
To encourage saving tendency among people.
Building bigger capital through savings.
To promote the trend of making money from money.
To control the money market, so that economic stability is maintained.
To advise and assist the government on economic issues.
To assist the government in trade, business and socio-economic development.
Importance of Commercial Bank
Commercial banks play the most important contribution in the economic and social development of any country. Such as – security of public money, interest on public deposits, giving loans to the needy and helps them in carrying out their work.