Generally bank means commercial bank from the ancient period of time. These banks function primarily as deposit takers and lenders to trade and commerce. Modern banking systems have been originated through the development of commercial bank. For this reason, many scholars consider commercial bank is the “Mother of modern bank”.
According to Prof. Roger, "The bank which deals with money and money’s worth with a view to earning profit is known as commercial bank."
According to Prof. Ashutosh Nath, "Commercial bank is and intermediary profit making institution.”
According to Prof. Gilbert "A commercial bank is a dealer in capital or more property a dealer in money. He is intermediate party between the borrower and the lender. He borrows from one party and lends to another and the difference between the terms at which he borrows and those at which he lends from the source of his profit.”
From the analysis of above definitions, it can be said that.
- Commercial banks are the financial intermediary or dealer in capital and money
- They collect deposits on current account, savings account, and fixed account from people
- They lend money to different people and organizations in various forms at a higher rate of interest
- They honor the customers’ cheques
- The main purpose of this bank is to earn profit.
Now -a-days these banks also conduct foreign exchange business.
Commercial bank is a profit-making institution that holds the deposits of individuals and businesses in checking and savings accounts and then uses these funds to make loans to individuals, businesses, and the government.
More from this Section
Retention refers risk management technique in which an individual or a firm retains part ...
- Value tomorrow
Value tomorrow refers to spot foreign exchange transaction in which delivery and payment ...
Assignments is a form of loan sale in which ownership of a loan is transferred to the ...
- Home equity loans
Home equity loans is the credit extended to an individual or family on the basis of the ...
- Escrow Account
Escrow Account is an account for which a bank acts as an uninterested third party (custodian ...