This document discusses commercial banks and their types and functions. It defines commercial banks as financial institutions that grant loans, accept deposits, and offer other financial services. It identifies three types of commercial banks: public sector banks which are nationalized by governments, private sector banks which are owned by private businesses, and foreign banks which are headquartered in foreign countries. It then discusses the key functions of commercial banks, including accelerating capital formation by mobilizing savings, providing finance and credit to trade and industry, developing entrepreneurship, promoting balanced regional development, and helping consumers.

1. -JITHIN.D
1ST B.COM

2. COMMERCIAL BANKS
 Commercial banks are the most important
components of the whole banking system.
 DEFINATION :
A commercial bank is a profit-based financial
institution that grants loans, accepts deposits, and
offers other financial services, such as overdraft
facilities and electronic transfer of funds.

3. COMMERCIAL BANKS ARE OF 3 TYPES.
Public Sector
Banks
Private Sector
Banks
Foreign
Banks

4. Refer to a type of commercial banks that are
nationalized by the government of a country. In public sector
banks, the major stake is held by the government. In India,
public sector banks operate under the guidelines of Reserve
Bank of India (RBI), which is the central bank. Some of the
Indian public sector banks are State Bank of India (SBI),
Corporation Bank, Bank of Baroda, Dena Bank, and Punjab
National Bank.
(a) Public Sector Banks:

5. (b) Private Sector Banks:
Refer to a kind of commercial banks in which major part of
share capital is held by private businesses and individuals.
These banks are registered as companies with limited
liability. Some of the Indian private sector banks are Vijaya
Bank, Industrial Credit and Investment Corporation of
India (ICICI) Bank, and Housing Development Finance
Corporation (HDFC) Bank.

6. (c) Foreign Banks:
Refer to commercial banks that are
headquartered in a foreign country, but operate branches
in different countries. Some of the foreign banks operating
in India are Hong Kong and Shanghai Banking
Corporation (HSBC), Citibank, American Express Bank,
Standard American Bank. In India, since financial reforms
of 1991, there is a rapid increase in the number of foreign
banks. Commercial banks mark significant importance in
the economic development of a country as well as serving
the financial requirements of the general public.

7. Structure of Commercial Banks in
India:

8. 1. Scheduled Banks:
Scheduled Banks refer to those banks which have been
included in the Second Schedule of Reserve Bank of
India Act, 1934.
(i) Public Sector Banks:
These banks are owned and controlled by the
government. The main objective of these banks is to
provide service to the society, not to make profits. State
Bank of India, Punjab National Bank, Canada Bank and
Corporation Bank are some examples of public sector
banks.

9. Public sector banks are of two types
(a) SBI and its subsidiaries;
(b) Other nationalized banks.
(ii) Private Sector Banks:
These banks are owned and controlled by private
businessmen. Their main objective is to earn profits.
ICICI Bank, HDFC Bank, IDBI Bank is some examples of
private sector banks.

10. (iii) Foreign Banks:
These banks are owned and controlled by foreign
promoters. Their number has grown rapidly since
1991, when the process of economic liberalization
had started in India. Bank of America, American
Express Bank, Standard American Bank are
examples of foreign banks.
2. Non-Scheduled Banks:
Non-Scheduled banks refer to those banks which
are not included in the Second Schedule of Reserve
Bank of India Act, 1934.

11. Importance of Commercial Banks:
1. Accelerating the Rate of Capital Formation:
Commercial banks encourage the habit of thrift and
mobilise the savings of people. These savings are
effectively allocated among the ultimate users of funds,
i.e., investors for productive investment. So, savings of
people result in capital formation which forms the basis
of economic development.

12. 2. Provision of Finance and Credit:
Commercial banks are a very important source of
finance and credit for trade and industry. The
activities of commercial banks are not only to
domestic trade and commerce, but extend to foreign
trade also.
3. Developing Entrepreneurship:
Banks promote entrepreneurship by underwriting
the shares of new and existing companies and
granting assistance in promoting new ventures or
financing promotional activities, to the banks.

13. 4. Promoting Balanced Regional Development:
Commercial banks provide credit facilities to rural
people by opening branches in the backward areas.
The funds collected in developed regions may be
channelised for investments in the under developed
regions of the country. In this way, they bring about
more balanced regional development.
5. Help to Consumers:
Commercial banks advance credit for purchase of
durable consumer items like Vehicles, T.V.,
refrigerator etc., which are out of reach for some
consumers due to their limited paying capacity. In
this way, banks help in creating demand for such
consumer goods.

14. Functions of commercial banks

15. Thank you.
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