As we well-known, Businesses need more complex services. They have a large transaction, need to accept payments from customers, and they might use letters of credit to do business overseas. So, In response to this demand grown Commercial banks.
The commercial bank is the department stores for financial services. They are corporations whose primary goal is to make a profit. Commercial banks take deposits and extend loans. They make a profit on the interest rate spread between the amount paid for deposits and the rate charged for loans.
Commercial Bank also earns income from maintenance fees on accounts and overdraft charges. Some banks focus on retail customers, while other banks concentrate on attracting business clients.
Types of Commercial Banks
1- Retail banks
Your checking and savings accounts are held at a retail bank, which focuses on consumers as customers. These banks give you credit cards, offer loans, and they’re the ones with numerous branch locations in populated areas.
2- Industrial Banks
Industrial banks are those banks which provide medium-term and long-term finance to industries for the purchase of land, machinery etc. They underwrite the debentures and shares of industries and also subscribe to them.
3- Savings Banks
Savings banks help promote small savings and mobilize them. The name savings and loan refers to the core activity they perform: take savings from one customer and make loans to another. This type of bank was important in making home ownership mainstream, using deposits from customers to fund home loans.
4- Cooperative Banks
Cooperative banks are those financial institutions which are organized on the principle of cooperation. They provide short and medium-term loans to their members. In rural areas, there are agricultural cooperative banks which accept deposits and give loans to agriculturists, rural artisans, etc.
5- Agricultural Banks
Agricultural banks are those banks which provide credit to farmers for short-term, medium-term and long-term needs. Financing requires more specialized knowledge of growing seasons, commodity prices, cost of fertilizer and other expenses unique to agriculture.
6- Online banks
Online banks operate entirely online. there are no physical branch locations available to visit with a teller or personal banker. Many brick-and-mortar banks also offer online services, such as the ability to view accounts and pay bills online. they often offer competitive rates on savings accounts and they’re especially likely to offer free services.