DIFFERENCE BETWEEN CENTRAL BANK AND

COMMERCIAL BANK
There are two types of banks based on the authority; these are
central banks and commercial banks. Central bank can be called the
apex bank, which is responsible for formulating the monetary policy
of an economy.

Commercial banks, on the other hand, are those banks that help in
the flow of money in an economy by providing deposit and credit
facilities. Commercial banks provide financial services to the
individuals and businesses.

Let us look at some of the points of difference between the central

bank and commercial banks.

Central Bank Commercial Bank

Definition

Central bank is the apex financial

It is a type of financial institution that
institution of the country that is
is concerned with providing banking
concerned with formation of
services to the general public and
monetary policies and the way
businesses by facilitating deposit,
money should be regulated in the
offering loan facilities
economy

Ownership

Central bank is always having public Commercial banks can be either

ownership public or private in their ownership

Number of Banks

There is only one central bank in a There can be many commercial banks
country in a country
 Profit Motive

Central bank does not operate for Commercial banks operate with the
making profit motive of earning profit

Clients

Commercial banks and the

Individuals and businesses
government

Policy creator

Central banks create monetary policy Commercial banks do not create any
to regulate interest rates in an policies that are essential for the
economy functioning of an economy

Source of Money Supply

Commercial banks run on the

Central banks are the source of deposits obtained from the
money supply in an economy individuals and hence they perform
no such function