Commercial banks are those banks which accept deposits from public and lend loans to public. They perform all kinds of banking business and generally finance trade and commerce. They deal in money and credit.
- The major features of a Commercial bank are as follows: It accepts deposits and lends loans.
- It deals in credit and it has ability to create credit.
- It is a commercial financial institution which tries to get profit.
- It creates demand deposits which serve as a medium of exchange.
According to RBI ACT, 1934, Indian commercial banks are classified as follows:
(a) Scheduled Banks: These are the banks which are included in the second schedule of RBI Act, 1934. Their paid up capital is more than Rs.5 lakhs.
(b) Non-Scheduled Banks: These are those commercial banks which are not included in second schedule of RBI Act, 1934. Their paidup capital is less than Rs.5 lakhs.
The commercial banks are classified on the basis of ownership as follows:
(a) Public Sector Banks: The banks which are owned and managed by the Government are called as Public Sector Banks, e.g. State Bank of India, State Bank of Mysore, Canara Bank, Punjab National Bank, etc.
(b) Private Sector Banks: The banks which are owned and managed by the private individuals or companies. They consists of both Indian and foreign private banks.
