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Money And Banking

Question
CBSEENEC12012747
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What is a commercial bank?  

Solution
Meaning of a Commercial Bank. A commercial bank is a financial institution which performs the functions of accepting deposits from the general public and giving loans for investment with the aim of earning profit. In fact, commercial banks as their name suggests are profit seeking institutions. They generally finance trade and commerce with short term loans. They charge high rate of interest from the borrowers but pay much less rate of interest to their depositors and this difference becomes the main source of their profit. Most of the Indian joint stock banks are Commercial Banks such as Punjab National Bank, Allahabad Bank, Canara Bank, Central Bank of India, Bank of Baroda, etc.

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