Commercial banks play a vital role in a country's economic development by providing short-term loans and credit. They accept deposits from the public and use those funds to issue loans. In India, many commercial banks were nationalized in 1969 and 1980 in order to increase government control over credit and promote lending to priority sectors like agriculture. Nationalized banks have expanded branches, especially in rural areas, but still need to improve lending and deposit mobilization. Commercial banks perform functions like accepting deposits, lending funds, operating checking accounts, and transferring money. They include public sector banks, private banks, foreign banks, and regional rural banks.

1. INDIRA GANDHI KRISHI VISHWAVIDYALAY, RAIPUR (C.G.)
A
PRESENTATION ON
Commercial Bank
SUBMITTED TO, SUBMITTTED BY
Dr. A.k.Gauraha Jyotsana Jogi
Professor,Deppt. Of Agri. M.Sc. (Ag.) Previous
Economics Deptt. Of Agri. Economics

2. INTRODUCTION TO COMMERCIAL BANK:-
 Commercial banks play a vital role in the economic development of a
nation.
 They are the most important source of institutional credit in the
money market as they provide short term loans and advances to its
customers.
 They perform a variety of functions and are the main source of credit
which is the main input for trade and business activity.
 A commercial bank is a profit seeking organization dealing in the other
people’s money, in the sense that it accepts deposits of money from
the public to keep them in its custody for safety.

3. Commercial banks occupy a dominant place in the
money market. They are the oldest, largest and
fastest growing financial institutions in India.
Commercial bank has two possible meanings:
a) It is the term used for a normal bank to
distinguish it from an investment bank.
b) Commercial banking can also refer to a
bank or a division of a bank that mostly deals with
deposits and loans from corporations or large
businesses, as opposed to normal individual
members of the public (retail banking).

4. NATIONALISATION OF COMMERCIAL BANKS
 By the 1960’s, the Indian banking industry has become an important tool
to facilitate the development of the Indian economy. With effect from July
18, 1969, 14 largest commercial banks were nationalized.
 A second dose of nationalization of 6 more commercial banks followed
in 1980. The stated reason for the nationalization was to give the
government more control of credit delivery. With the second dose of
nationalization, the GOI controlled around 91% of the banking business
of India.
 After this, until the 1990’s the nationalized banks grew at a place of
around 4%, closer to the average growth rate of the Indian economy.
 Indira Gandhi was the then P.M. 6 more banks were nationalized in 1980.
National credit council was implementing body. In 1993 two banks were
nationalized and no. of nationalized banks is 19.
 The main objectives of nationalization were as follows:
1. To introduce social banking by directing bank funds at concessional rates
to the weaker sections of society for productive purposes.
2. To prevent monopolies in the banking sector caused due to use of major
share of funds by a few private entrepreneurs.

5. Definition of 'Commercial Bank'
 “A financial institution that provides services, such as accepting
deposits, giving business loans and auto loans, mortgage lending, and
basic investment products like savings accounts and certificates of
deposit.”
 “Definition Commercial Banks are like other financial institutions (eg.
money lenders, indigenous bankers, cooperative societies, agricultural
and industrial credit institutions) which are in the business of lending and
borrowing of money or credit.”
 “A commercial bank is a financial institution that takes deposits,
issues loans and conduct other financial services. Deposits are made into
bank accounts such as savings, money market and checking accounts.
Banks are profit seeking institutions. which compete with each other for
customers.”

6. Objectives of nationalization
1) To reduce concentration of economic powers with only a
few industrial magnets and to prevent monopolies.
2)Mobilize resources even from backward and rural areas.
3)To prevent lopsided regional development.
4)To prevent corruption and misuse of firms: the trustees were
only benefiting from huge resources and it was at the cost
of general development in the country.
5)To provide aid to the poor, small artisans and small scale
industries. Small scale industries contributed 40% of
industrial output but received only 4% of bank funds.
6) To fulfill credit needs of farmers: hardly 2.2% of funds
were available for agriculture.

7. PERFORMANCE OF COMMERCIAL BANKS IN THE POST -
NATIONALIZATION PERIOD
1. Achievements: (a) Lead Bank Scheme, (b) Branch Expansion,
Commercial Banking nationalization, branches expanded at about 2,400
per year. Total number of bank branches has increased from 8262 in
1969 to 67,283 in 2007. Over 80% of bank offices are located in
backward states and in semi-urban areas and rural areas. This, to some
extent took care of regional imbalance in the spread of banking.
(c) Deposit Mobilization: As a result of expansion of banking facilities,
there was a large increase in deposits. In 1969, deposits amounted to
13% of the GDP, by 2004 this ratio increased 350 times. The increase
in rural deposits as production of total has been from 3% to 15%. Bank
deposits now constitute about 40% of financial assets held by
households.
(d) Bank Lending: Traditionally, banks in India had concentrated in
providing working capital to industry and trade. Only after
nationalization, loans are being given for agricultural operations. Bank
credit stood at Rs. 3, 399 crore in 1969.

8. (e) Directed Credit Programmes: A major objective of bank
nationalization was to make bank credit available the priority sector,
comprising of agriculture, small scale industries, exports,
transporters and small traders at concessional rates.
2. Shortcomings:
(a) Inadequate Banking facilities: Despite achievements in branch
expansion, banking facilities continue to remain inadequate to
meet the needs of the large population.
(b) Inadequate Deposit Mobilization: Banking habits of people in
India are still not very good.
(c) Inadequate lending: Even though there has been significant
increase in lending to priority sectors, it is still inadequate in
comparison to the needs of these sectors.
(d) Increased Expenditure: After nationalization, there has been
significant increase in expenditure on banking operations.
(e) Low Level of Efficiency: Public sector banks have suffered from
lack of proper supervision and control.

9. FUNCTIONS OF COMMERCIAL BANKS
Commercial banks perform several crucial functions to
satisfy the needs of the various sectors of the economy,
which may be classified into two categories:
(I) Primary functions:
1. Acceptance of deposits from the public;
2. Lending of funds;
3. Use of cheque system; and
4. Remittance of funds.
(II) Secondary functions:
o Commercial banks can also trade in currency. They say and cash
traveler's checks, for instance.
o In developing countries, commercial banks go as far as funding
developmental projects. If the government wants to build a bridge,
for example, it might consider borrowing from a local bank rather
than getting an offshore loan which might be expensive.

10. Activities of Commercial Banks:-
The modern Commercial Banks in India cater to the financial
requirements of different sectors. The main functions of the
commercial banks comprise:
• Transfer of funds.
• Acceptance of deposits.
• Offering those deposits as loans for the establishment of
industries.
• Purchase of houses, capital investment purposes and
equipments, etc.
• The banks are allowed to act as trustees. On description of the
knowledge of the financial market of India the financial
companies are attracted towards them to act as trustees to take
the responsibility of the security for the financial instrument
like a debenture.
• The Indian Government presently hires the commercial banks
for different purposes like tax collection and refunds, payment
of pensions etc.

11. Commercial Banks Play an Important Role
in a Modern Economy
1) They constitute the very life-blood of modern trade,
commerce & industry, as they provide the necessary
funds for their working capital such as to buy raw
materials, to pay wages, to incur current business
expenses in marketing of goods, etc
2) These banks encourage people’s savings habit through
their various savings deposit schemes.
3) They also mobilize idle saving resources from
households to business people for productive use.
4) They transmit money from place to place with economy
and safety.
5) Their agency services are, no doubt, of immense value
to the people at large, as they case their difficulties, save
their time & energy &provide them safety & security.

12. TYPES OF COMMERCIAL BANKS:
1. Scheduled banks, 2.Non- Scheduled Banks.
1. Scheduled Banks: A scheduled bank is one which is registered in the second
schedule of the Reserve Bank of India. The following conditions must be
fulfilled by a bank for inclusion in the schedule:
a) The banker concerned must be in business of banking in India;
b) It is either a company defined in Section 3 of the Indian Companies Act, 1956,
or corporation or a company incorporated by or under any law in force in any
place outside India or an institution notified by the central government in this
behalf;
c) It must have paid-up capital and reserves of an aggregate role of exchangeable
value of not less than rupees five lakhs;
d) It must satisfy the Reserve Bank of India that its affairs are not conducted in a
manner detrimental to the interests of its depositors. Scheduled banks come
under the purview of the various credit control measures of the Reserve Bank
of India.
• Scheduled Commercial Banks are grouped under following categories:
1. State Bank of India and its Associates
2. Nationalized Banks
3. Foreign Banks
4. Regional Rural Banks
5. Other Scheduled Commercial Banks.

14. 2. Non- Scheduled Banks: Banks, which are not included in
the Second Schedule of the RBI, are known as non-
scheduled banks. They may be classified into 4 groups:
a) Banks with paid-up capital and reserves in excess of Rs. 5
lakhs;
b) Banks with paid-up capital and reserves ranging between
Rs. 50,000 and one lakh of rupees;
c) Banks with paid-up capital and reserves ranging between
one lakh of rupees and 5 lakhs;
d) Banks with paid-up capital and reserves below Rs.
50,000. Non- Scheduled banks are not entitled to all those
facilities that the scheduled banks avail of from the
Reserve Bank of India. Since the enactment of the
Banking Regulation Act in 1949, non-scheduled banks
have also come under the ambit of the RBI control.

16. List of Commercial Banks in
India:
• Reserve Bank of India
• Abu Dhabi Commercial Bank
• Allahabad Bank.
• Andhra Bank
• Bank of India
• Bank of Madura
• Bank of Punjab
• Canara Bank
• Chinatrust Commercial Bank
• IDBI Bank
• Indian Bank
• Indian Overseas Bank
• IndusInd Bank Limited
• Industrial Development Bank of India
(IDBI)
• Mandvi Co-operative Bank Ltd.
• National Bank for Agriculture and Rural
Development
• Nedungadi Bank Ltd
• Punjab & Sind Bank
• Standard Chartered
• State Bank of India
• State Bank of Travancore
• Syndicate Bank
• TimesBank
• UCO Bank
• Union Bank of India (UBI)
• United Bank of India
• Vysya Bank
• Citibank
• City Union Bank
• Corporation Bank Cosmos Bank
• Dena Bank
• Development Credit Bank Limited
• Export-Import Bank of India
• Federal Bank Limited
• First Leasing Company of India Ltd.
• Global Trust Bank Limited
• ICICI Bank