What is Commercial Bank and Services provided by Commercial Banks 1


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Commercial Bank Definition:

Commercial Bank provides services like accepting deposits, lending business, auto, home loans and essential investment products for customers like savings accounts, term deposit and many more where bank in exchange compensate interest on investments and deposits. Some of the commercial banks in India are Indian Bank,  Andhra Bank, Punjab National Bank, Canara Bank, etc. This bank mostly deals with transactions from large business group or corporate as opposed to transactions from individual customers know as retail banking. Now a days, Modern commercial banks are termed as online commercial banks where they do not own any physical offices customer can fulfil all the transactions over the internet or over the phone.


List of top 10 Commercial Banks known as the World Largest Bank ranked by total assets (in million) as of 2015 are:

Bank / Holding Company NameRankConsolidated Assets
JP Morgan Chase & Co.1Appox. $20,96,114
Bank of America Corp.2Appox. $15,99,746
Wells Fargo & Company3Appox. $15,71,389
Citibank4Appox. $13,35,871
U.S. Bancorp5Appox. $4,05,363
PNC Financial Services Group6Appox. $3,40,231
Bank of New York Mellon Corporation7Appox. $3,16,699
State Street Bank & Trust Co.8Appox. $2,74,919
Capital One9Appox. $2,53,202
Toronto-Dominion Bank10Appox. $2,34,389

Wiki Finance pedia - e-learning course on Banking wikipedia Chapter - What is Commercial BankPrimary Functions of Commercial Banks are:

  • Commercial bank facilitates customers to deposit funds in various schemes like fixed deposits, term deposits, saving account deposits and recurring account deposits. These deposits are payable with interest to the customers.
  • Commercial bank facilitates loans and advances services to the customers like money at call, overdraft facility, bill discounting, cash credit and many more.
  • Commercial bank provide customers with secured loans like mortgage loan, loan on savings account, etc and unsecured loans like corporate bonds, credit card debt, lines of credit, personal loans, etc.
  • Commercial bank also generate credit creation by technique, when disbursing loan to a customer. Banks instead of providing loan in cash they request customer to open a deposit account from where borrower can withdraw funds this is known as reverse engineering of creating deposits known as a credit creation.

Secondary Functions of Commercial Banks are:

  • Commercial bank encourage customers with advisory, broking and agency services like: collecting cheques, recurring payments for rent, insurance premium, etc; dealing with foreign exchange transactions, buying and selling of securities, filling tax returns, etc where bank charges commission for the services.
  • Commercial bank provide utility services which includes providing safety locker, issuing travel cheques, money transfer facilities, provide gateway for bill payment of phone, gas, water, etc; provide paper money by way of issuing credit cards, debit cards, etc and bank either offer free or nominal charges for the services.

 

  

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One thought on “What is Commercial Bank and Services provided by Commercial Banks

  • Sherley Fernandis

    Wow, that’s what I was seeking for, exactly what a stuff! present at this weblog, You have very well explained various services provided by banks also types of services do commercial banks offer. Thanks admin with this.