Types of products and services Commercial banks offer.

There are many types of banking regulatory bodies, there are international banks, investment
banks, microfinance banks, central banks and commercial banks. Commercial banking has
always been the backbone of banking. There are so many commercial banks to name in Pakistan.
There is HBL, UBL, AlFalah bank, Allied bank etc. these are the basic banks. They have a much
regulated system. These banks are open to corporations and most importantly, the general public.
People or companies can open accounts in these banks to carry out basic activities. These banks
provide a wide range of products and services both to the general public and the corporations.

Commercial banks earn by providing loans and earning interests on those loans. The types of
loans a commercial bank offers can vary. There are mortgage loans, business loans or personal
loans. The commercial banks get their capital from customer deposits, money market accounts,
saving accounts or certificate of deposits. These are a few types of products and services a bank
offers to its commercial customers.

 Industrial Loans:
Industrial loans by name can be figured as loans given to corporations. Banks give out
loans to organisations on a certain interest rate settled by the central bank, in Pakistan’s
case it is given by the State Bank of Pakistan. Mega corporations find the industrial loans
outdated, which is a primary source of income for the banks. Mega corporations instead
have the power to raise funds directly, this is cheaper for them because they don’t have to
pay intermediary to the banks. As the primary business of banks is declining, they have
offered other services like assisting clients in issuing their debt securities.

 Project financing:
This is the type of service that big corporations rely on even now. Banks usually fund
projects carried by corporations over a few conditions. If the project goes bankrupt, the
bank would have to acquire the assets of the said project. The corporation handling the
project has limited liability.
 Syndicate loans:
This is when banks usually collectively give loans to mega corporations. For example,
General Motors is a huge company and a single bank cannot handle the loan load of it so
2, 3 banks combine to give out loan to GM. One bank has the lead role in financing this
loan, hence it is call ‘lead financer’, and this bank also offers a special fee.

 Leasing:
Nowadays, a lot of companies have started using leasing as a financing method.
Companies usually sign financial leases in order to acquire real estate, automobiles,
factory machinery etc.

 Foreign trade financing:

As we know that there are many large organisations stationed across the borders, banks
have specialized in such financing. Banks provide them with letter of credit, export
financing and bank guarantees that ensure the foreign trade has been conducted in an
efficient manner.

 Bills of exchange:
Corporations use bills of exchange for account receivables and account payables. For
example, if Stanza corp. has to pay Terance Corp. on a later date, both of them will sign
the bill of exchange and then Stanza corp. will have to take the bill to the bank in order to
get it discounted.