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Commercial Banks: What you need to know?

September 10, 2024

commercial banks types, importance, functions

In today’s large financial landscape, commercial banks play an important role in the economic system.

They serve as a crucial source for various financial transactions. This makes them the ultimate provider of a range of services to individuals and businesses.

Let us now delve into the fundamentals of commercial banks, exploring their functions, types, and the role they play in our daily lives.

What is a Commercial Bank?

A commercial bank is a financial institution that offers a wide range of banking services to the general public and businesses. These services include the following:

  • Accepting deposits
  • Providing loans
  • Facilitating transactions
  • Offering various financial products

Types of Commercial Banks

Commercial banks can be classified into several types based on their functions and the customers they serve.

The primary categories include retail banks, corporate banks, and investment banks.

    • Retail banks: These types of banks cater to individual customers. They provide services such as savings and checking accounts, personal loans, and mortgages.
    • Corporate banks: These types of banks focus on providing financial services to businesses. Corporate banks help customers with business loans, cash management, and other financial needs of companies.
    • Investment Banks: These banks help businesses in raising capital through activities such as underwriting and issuing securities.

Every type of bank has a different purpose and therefore, provides distinct services accordingly. They all contribute to the overall functioning of the financial ecosystem.

Importance of Commercial Banks

Commercial banks act as intermediaries where they allow the flow of money in the economy.

One of the important functions performed by commercial banks is to accept deposits from the public and provide a safe space for individuals and businesses to store their money.

Another important role of commercial banks is their contribution to the nation’s economic growth by providing credit and loans.

Commercial banks extend financial assistance to individuals for various needs, such as home purchases, education, and starting a business. Moreover, they also play a crucial role in providing working capital and investment funds to businesses.

This helps to foster economic development.

Additionally, commercial banks are instrumental in promoting financial stability by managing and controlling the money supply.

Top 3 Functions of Commercial Banks

Commercial banks perform multiple functions to ensure the smooth functioning of financial operations. These functions include:

1. Accepting Deposits: Commercial banks provide a safe financial space for individuals and businesses to deposit their money.<>

2. Providing Loans: These banks offer various types of loans, such as personal loans, home loans, and business loans. These products ensure to meet the different financial needs of the customers.

3. Credit Creation: Commercial banks lend money through their services. This helps the banks to contribute to the creation of credit. This will further lead to economic growth.

Now, while understanding the fundamental aspects of commercial banks is crucial, the financial landscape is ever-evolving.

Staying updated with the latest trends and advancements in the banking sector is equally important.

For this, opting for a short-term certification course in banking is the most beneficial choice.

These certifications are highly valuable as they provide individuals with knowledge of the world of finance. The curriculum of these courses equips candidates with the skills required to face and learn the complexities of the banking industry.

For those looking to pursue a career in banking, there are some of the best banking course institutes in Mumbai, like the Thadomal Shahani Centre for Management (TCSFM).

It offers specialized courses carefully designed to meet the banking industry’s demands. Moreover, TSCFM’s banking courses cover various aspects of the banking sector.

In conclusion, a detailed understanding of commercial banks is essential for anyone looking for a job in the financial landscape.

Recognizing the importance of commercial banks and their functions and staying updated with the latest trends through short-term certification courses can help you make way for a successful career in the banking sector.

Institutions like the Thadomal Shahani Centre for Management play a crucial role in providing the necessary education and skills to be successful in this industry.

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