Banking Defination: Accepting for the purpose of lending or investment of deposits of moneyfrom Public, Repayable on demand or otherwise and withdrawable by cheques, drafts, order,etc.A
, also called a business bank, is a financial intermediary which providesmoney market, checking, and savings accounts and accepts time deposits from customers.These banks are under the authority of national central banks. At present, there are over6,500 FDIC-insured commercial banks in the United States, down from over 12,000 in 1990.They operated through some 89,170 offices and 82,641 branches in 2010.Commercial banks offer business loans, instalment loans, and other loan types, issue bankchecks and bank drafts, and process payments through internet banking, EFTPOS, telegraphictransfer, or other means. In addition, commercial banks provide standby and documentaryletter of credit, cash management and private equity financing. A traditional role of commercial banks has been to unde
rwrite securities, but today’s big commercial banks have
their own investment bank arms which are involved in this. Commercial banks also provideguarantees and offer performance bonds, along with safekeeping of documents. Finally, unittrusts, insurance, and brokerage are also offered by commercial banks.Commercial banks also work as retail banks and serve businesses as well as individual clients.Business entities have different needs and requirements than consumers. Some companiesrequire that the bank accommodates a considerable volume of cash deposits and credit cardpayments. In general, commercial banks serve the needs of small and large businesses byproviding a variety of services. These include savings and checking accounts, loans for capitaland real purchases, letters of credit, and lines of credit. Other services offered to businessesare foreign exchange, lockbox services, and transaction and payment processing. Commercialbanks accept deposits to corporate and personal accounts and then use the money to extendfinancing to businesses and individuals. This is the opposite of what investment banks do
they specialize in generating revenue through investment activities. Commercial banks extendvarious loans to their clients. To their individual customers, commercial banks give out loansfor the purchase of homes, vehicles, and other personal property. Commercial banks alsoextend loans for debt consolidation and home improvements. Business entities obtain businessloans for the purpose of purchasing operating supplies or financing a payroll. On the otherhand, if a business aims at corporate restructuring or realignment, such business loans aremore likely to be financed by an investment bank.Commercial banks offer three main types of loans
unsecured loans, secured loans, andmortgages. Unsecured loans may be available under various marketing packages, includingpersonal loans, credit card debt, bank overdrafts, and other loans. Unsecured loans are notguaranteed with collateral unlike the secured variety. Mortgage loans are a popular debtinstrument, which is used to buy real estate. Many commercial banks did not specialize in realestate loans in the past, securing their earnings mainly from consumer and commercial loans.With changes in banking policies and laws, these banks play a more active role in homefinancing.