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 Name||Rank||Consolidated Assets|
|JP Morgan Chase & Co.||1||Appox. $20,96,114|
|Bank of America Corp.||2||Appox. $15,99,746|
|Wells Fargo & Company||3||Appox. $15,71,389|
|U.S. Bancorp||5||Appox. $4,05,363|
|PNC Financial Services Group||6||Appox. $3,40,231|
|Bank of New York Mellon Corporation||7||Appox. $3,16,699|
|State Street Bank & Trust Co.||8||Appox. $2,74,919|
|Capital One||9||Appox. $2,53,202|
|Toronto-Dominion Bank||10||Appox. $2,34,389|
Primary 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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Basics of Banking and Financial Services for Beginners
- Chapter 1: What is Bank and Role of Bank in Economic Development
- Chapter 2: Different Types of Financial Services Provided by Banks
- Chapter 3: Different Types of Banking and Financial Institutions
- Chapter 4: What is Retail Banking and Services provided by the Banks
- Currently Reading: What is Commercial Bank and Services offered by Banks
- Chapter 6: What is Private Banking and Services offered by Best Banks
- Chapter 7: What is Investment Banking and Services offered by Bankers
- Chapter 8: What is Investment? How to Start Systematic Investment Plan?
- Chapter 9: What is Fixed Income Securities Market?
- Chapter 10: What are Bond Funds? Difference between Stocks and Bonds
- Chapter 11: What is Stock Market? How to Invest in Stock Market?
- Chapter 12: What is a Mutual Funds? Types of Mutual Funds with Examples
- Chapter 13: What is Futures Trading? How to Trade in Future Contracts?
- Chapter 14: What is Options Trading? How does Options Trading Works?
- Chapter 15: Banking Quiz - Basics of Banking and Financial Services for Beginners
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