Commercial banks of India / Types and Meaning

Commercial banks

Commercial banks are banking institutions that accept deposits and grant short term loans and advances to their customers.

In addition to giving short term loans, commercial banks also give medium term and long term loan to busy enterprises.

Now a days some of the commercial banks are also providing housing loan on a long term basis to individuals.

There are also many other functions of commercial banks, which are discussed later in this lesson.

> BANKS OF TYPES

Commercial banks of Types :-

Commercial banks are of three types , public sector banks, private sector banks and foreign banks.

1. Public sector banks- These are banks where majority stake is held by the government of India or reserve Bank of India. Examples of public sector banks are state Bank of India, corporation bank, bank of Baroda and dena bank, etc.

2. Private sector banks- In case of private sector banks majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. For example the ICICI bank, axis Bank, federal bank etc.

3. Foreign banks- These banks are registered and have headquarters in a foreign country but operate their branches in our country. Some of the foreign banks operating in our country are Hong Kong and Shanghai Banking corporation ( HSBC ) Citibank, American express bank, standard & chartered Bank etc. The number of foreign banks operating in country has increased since the financial sector reforms of 1991.

4. Development banks- Business often requires medium and long term capital for purchase of machinery and equipment, ford you think latest technology or ford extension and monetization . such financial assistance is provided by development banks.

They are so undertaker development measures leg subscribing to the shares and debentures issued by comparing, in case of under subscription of the issue by the public. Industrial finance corporation of India ( IFCI) and state financial corporations ( SFCs) are examples of development banks in India

5. Co-operative Bank-  people who come together to jointly serve their common interest often form a co operative society under the co-operative societies act.

When a cooperative society engages itself in banking business it is called a cooperative Bank. The society has to obtain a license from the reserve Bank of India before starting banking business. Any cooperative Bank as a society has to function under the overall supervisor of the registrar, cooperative societies of the state. As regards banking business, the society must follow the guidelines set issued by the reserve Bank of India.