Commercial Banks in India

Commercial banks form a significant part of the country’s Financial Institution System.
Commercial Banks are those profit seeking institutions which accept deposits from general
public and advance money to individuals like household, entrepreneurs, businessmen etc. with
the prime objective of earning profit in the form of interest, commission etc. The operations of
all these banks are regulated by the Reserve Bank of India, which is the central bank and
supreme financial authority in India. The main source of income of a commercial bank is the
difference between these two rates which they charge to borrowers and pay to depositers.
Examples of commercial banks – ICICI Bank, State Bank of India, Axis Bank, and HDFC Bank.
Classification of commercial banks
1. Scheduled banks :- Banks which have been included in the Second Schedule of RBI Act
1934. They are categorized as follows:
o Public Sector Banks :- are those banks in which majority of stake is held by the
government. Eg. SBI, PNB, Syndicate Bank, Union Bank of India etc.
o Private Sector Banks :- are those banks in which majority of stake is held by
private indivisuals. Eg. ICICI Bank, IDBI Bank, HDFC Bank, AXIS Bank etc.
o Foreign Banks :- are the banks with Head office outside the country in which
they are located. Eg. Citi Bank, Standard Chartered Bank, Bank of Tokyo Ltd. etc.
2. Non scheduled commercial banks :- Banks which are not included in the Second
Schedule of RBI Act 1934.
Activities of Commercial Banks
Primary Functions of Commercial Banks:
Deposit Acceptance: Being a short term credit dealer, the commercial banks accept the savings
of public in the form of following deposits:
 Fixed term deposits
 Current A/c deposits
 Recurring deposits
 Saving A/c deposits
 Tax saving deposits
 Deposits for NRIs
Lending Money: a second major function is to give loans and advances and thereby earn interest
on it. This function is the main source of income for the bank. Overdraft facility: Permission to a
current A/c holder of withdrawal more than to what he has deposited.
Loans & advances: A kind of secured and unsecured loans against some kind of security.
Discounting of bill of exchange: in case a person wants money immediately, he/she can present
the B/E to the respective commercial bank and can get it discounted.
Cash credit : Facility to withdraw a certain amount of money on a given security.
Secondary Functions of Commercial Banks:
Agency functions: Bank pays on behalf of its customers as an agent and gets paid fee for agency
functions such as:
 Payment of taxes, bills
 Collection of funds through bills, cheques etc.
 Transfer of funds
 Sale-purchaseof shares and debentures
 Collection/Payment of dividend or interest
 Acts as trustee & executor of properties
  Forex Transactions
 General Utility Services: locker facility
Credit Creation: It is one of the most outstanding function of commercial banks. A bank creates
credit on the basis of its primary deposits. It further lends the money which people has depositted
with the bank also charge interest on this money, which is much higher than what it actually pays
to depositer. Thus bank generates money for itself.

Last Updated on January 17th, 2019

List of Commercial Banks in India

SBI  Union Bank of India  Chinatrust Commercial Bank

Nationalised Banks:
 Allahabad Bank
 Andhra Bank
 Bank of Baroda
 Bank of India
 Bank of Maharashtra
 Canara Bank
 Central Bank of India
 Corporation Bank
 Dena Bank
 IDBI Bank Ltd.
 Indian Bank
 Indian Overseas Bank
 Oriental Bank of Commerce
 Punjab & Sind Bank
 Punjab National Bank
 Syndicate Bank
 UCO Bank
 United Bank of India
 Vijaya Bank
Foreign Banks:
 ABN Amro Bank
 Abu Dhabi Commercial Bank
 American Express Banking
Corporation
 Antwerp Diamond Bank
 AB Bank
 Bank International Indonesia
 Bank of America
 Bank of Bahrain & Kuwait
 Bank of Ceylon
 Bank of Nova Scotia
 Bank of Tokyo Mitsubishi UFJ
 Barclays Bank
 BNP Paribas
 Calyon Bank
 Citibank
 DBS Bank
 Deutsche Bank
 Hongkong & Shanghai Banking
Corporation
 JP Morgan Chase Bank
 JSC VTB Bank
 Krung Thai Bank
 Mashreq Bank
 Mizuho Corporate Bank
 Oman International Bank
 Shinhan Bank
 Societe Generale
 Sonali Bank
 Standard Chartered Bank
 State Bank of Mauritius
 UBS AG

Classification and Operations of Commercial Banks in India

Government banks (at present 20) form a prominent part of the country’s Financial
Institution System. Commercial Banks are those profit making institutions which accept
deposits from general public and gives money (loan) to individuals like household,
entrepreneurs, businessmen etc. The prime objective of these banks is to earn profit in the
form of interest, commission etc. The operations of all these commercial banks are
regulated by the Reserve Bank of India, which is the central bank and supreme financial
authority in India.
Commercial banks form a prominent part of the country’s Financial Institution System.
Commercial Banks are those profit making institutions which accept deposits from general
public and gives money (loan) to individuals like household, entrepreneurs, businessmen etc.
The prime objective of these banks is to earn profit in the form of interest, commission etc. The
operations of all these commercial banks are regulated by the Reserve Bank of India, which is
the central bank and supreme financial authority in India.
The main source of income of a commercial bank is the difference between these two rates
which they charge to borrowers and pay to depositors. Some commercial banks in India are –
ICICI Bank, State Bank of India, Axis Bank, and HDFC Bank, Punjab national bank, Central
bank of India.
At present, there are 20 Public Sector Banks in India including SBI.
Classification of commercial banks
1. Scheduled Banks:- Banks which have been included in the Second Schedule of RBI Act
1934. They are categorized as follows:
2. Public Sector Banks:- These are those banks in which majority of stake is held by the
government. Eg. SBI, PNB, Syndicate Bank, Union Bank of India etc.
3. Private Sector Banks:- These are those banks in which majority of stake is held by
private individuals. ie. ICICI Bank, IDBI Bank, HDFC Bank, AXIS Bank etc.
4. Foreign Banks:- These are the banks with Head office outside the country in which they
are located. Eg. Citi Bank, Standard Chartered Bank, Bank of Tokyo Ltd. etc.
5. Non scheduled commercial Banks:- Those banks which are not added in the Second
Schedule of RBI Act 1934.
Functions of Commercial Banks
Primary Functions of Commercial Banks:
Deposit Acceptance:
 Being a short term credit dealer, the commercial banks accept the savings of public in the form
of following deposits:
1. Fixed Term deposits
2. Current A/c deposits
3. Recurring deposits
4. Saving A/c deposits
5. Tax saving deposits
6. Deposits for NRIs
Lending Money:  A second major function is to give loans and advances and thereby earn
interest on it. This function is the main source of income of the banks.
Overdraft facility: its permission to a current A/c holder of withdrawal more than to what he
has deposited in his/her account.
Loans & Advances: A kind of secured and unsecured loans against some kind of security.
Discounting of bill of exchange: in case a person wants money immediately, he/she can present
the B/E to the respective commercial bank and can get it discounted.
Cash Credit:
It is a facility to withdraw a certain amount of money on a given security.
Secondary Functions of Commercial Banks:
Agency functions: Bank pays on the behalf of its customers as an agent and gets  fee for agency
functions such as:
1. Payment of taxes, bills
2. Collection of funds through bills, Cheques etc.
3. Transfer of funds
4. Sale-purchase of shares and debentures
5. Collection/Payment of dividend or interest
6. Acts as trustee & executor of properties
7. Foreign exchange Transactions
8. General Utility Services: locker facility
Credit Creation: It is one of the most important functions of commercial banks. A bank creates
credit on the basis of its primary deposits. It further lends the money to common borrowers/
corporate/investors .This landed money is deposited by those people to have excess money and
want to earn a fix return on their money. Commercial banks charges more rate of interests from
customers (borrowers) as compared to given to the depositors of the money.
List of Commercial Banks in India
SBI & Associates:
1. State Bank of India
Nationalized Banks:
1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. Indian Bank
11. Indian Overseas Bank
12. Oriental Bank of Commerce
13. Punjab & Sind Bank
14. Punjab National Bank
15. Syndicate Bank
16. UCO Bank
17. Union Bank of India
18. United Bank of India
19. Vijaya Bank
Foreign Banks:
1. ABN Amro Bank 7. Bank of Bahrain & Kuwait 14. Deutsche Bank
2. Abu Dhabi Commercial Bank 8. Bank of Ceylon 15. Hongkong & Shanghai Banking
3. American Express Banking 9. Barclays Bank Corporation
Corporation 10. BNP Paribas 16. JP Morgan Chase Bank
4. AB Bank 11. Chinatrust Commercial Bank 17. Standard Chartered Bank
5. Bank International Indonesia 12. Citibank 18. UBS AG
6. Bank of America 13. DBS Bank
Is IDBI Bank a Public Bank?
LIC completes acquisition of 51% stake in IDBI Bank. So the IDBI bank is no more public
sector bank. The number of public sector lenders has come down to 20.
Here it can be conclude that network of commercial banks will play a prominent role in the
economic development coming years, especially after the introduction of plan of financial
inclusion in the whole country.