Commercial Banks:

In India, commercial banks are established under Companies Act, 1956. In 1969, 14 commercial banks were nationalized by Government of India. The policies regarding deposits, loans and rate of interest of these banks are controlled by the Central Bank. Commercial banks are established with an objective to help businessmen.

These banks collect money from general public and give short-term loans to businessmen by way of cash credits and overdrafts. Commercial banks provide various services like collecting cheques, bill of exchange, and remittance money.

Central/Federal/National Banks:

Central banks are present in almost every country of the world. In India it is the ‘Reserve Bank of India’, in U.S.A it’s the ‘Federal Bank’ and in U.K it’s the ‘Bank of England’. These central banks are usually the bankers of the other banks. They provide specialized functions of issuing paper currency, working as bankers of government, supervising and controlling foreign exchange. A central bank is a non-profit making institution.

Industrial Banks/Development Banks:

Industrial/Development banks usually collect cash by issuing shares and debentures and providing long term loans to industries. The main objective of these banks is to provide long-term loans for expansion and modernization of industries. In India, such banks are established on a large scale after independence. They are Industrial Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI) and Industrial Development Bank of India (IDBI).

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