Commercial Banks

Normal banks are known as commercial banks, their main function is to accept deposits from the customer and on the basis of that they grant loans. (Loans could be short-term, medium-term and long-term loans.) Commercial banks are further classified into three types.

(a) Public sector banks

(b) Private sector banks

(c) Foreign banks

(a) Public Sector Banks (PSB): Government banks are known as PSB. Since the majority of their stakes are held by the Government of India. (For example: Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharastra, Canara Bank, Central Bank of India etc).

(b) Private Sector Banks: In these banks, the majority of stakes are held by the individual or group of persons. (For example: Bank of Punjab, Bank of Rajasthan, Catholic Syrian Bank, Centurion Bank etc).

(c) Foreign Banks: These banks have their headquarters in a foreign country but they operate their branches in India. For e.g. HSBC, Standard Chartered Bank, ABN Amro Bank.

Development banks:

Such banks are specially meant for giving loans to the business sector for the purchase of latest machinery and equipments. Examples: SFCs (State Financial Corporation of India) and IFCI (Indian Finance Corporation of India).

Co-operative banks:

These banks are nothing but an association of members who group together for selfhelp and mutual-help. Their way of working is the same as commercial banks. But they are quite different. Co operative banks in India are registered under the Cooperative Societies Act, 1965. The cooperative bank is regulated by the RBI.

Note: Co-operative banks cannot open their branches in foreign countries while commercial banks can do this.

Types of bank accounts

Savings bank account

Current account

Fixed Deposit account