Education and Career Forum

Difference between Central Banks and Commercial Banks?

Difference Between Central Banks and Commercial Banks:

The Central is apex monetary Institution, which has been specially empowered to exercise control over the banking system of the country.

The Central Bank does not operate with a profit motive and commercial banks do not enjoy such thing.

The central bank does not deal directly with pubic and the commercial bank directly deal with the public.

The Central bank acts as the banker to the government, the commercial banks acts bankers to the general public.

There are major difference between central and commercial banks.

* Commercial banks accepts deposits from the public and provide loans to the individuals and other organizations. The central bank don't accept the deposits from any one but provides loans to the Scheduled banks and financial institutions.

* Central bank of India has the power to print the currency from Rs.2 and above whereas the commercial bank cannot print the currency.

* Commercial banks are owned by private/ Government agencies while the Central banks are owned by Government of India.

* They are many commercial banks operating in the country but there is only one central bank (RBI).

* Central bank has control over all the banks whereas the commercial bank do not have control on the central bank.

* Individuals and organizations are the account holders of the commercial banks. In central bank the account holders are scheduled banks and the Government.

Difference between Central Banks and Commercial Banks:

>> Central Banks generally regulated the Commercial Banks

>> Central Banks does not accept deposits from Public, where as Commercial Banks accept Deposits from Public

>> And Central Banks are state-owned institutions, while commercial banks are normally private owned institutions.

>> Central Banks can issue currency, notes and issue deposits to the Government and it does not even issue loans to public and instead it creates the credit. Where in, Commercial Banks accept deposits from the public and issue loans to public and issues credit.

>> Central banks does not deal directly with the public, where as commercials banks generally deal with the public directly.

>> There are many number of commercial banks oprating in India presently, where in we have only one Apex Central Bank i.e., Reserve Bank of India.

>> Account holders of Commercial Banks are organizations and Individuals, where as the account holders of Central Bank are Banks and Government organizations.