Difference between commercial banking and merchant banking
Answers
Meaning
Commercial bank is a banking company established by a number of people for providing the basic banking functions i.e. accepting deposits and lending money to general public.
Merchant bank refers to the financial institution, that specializes in international trade and provide and array of services to its clients.
Governing body
Commercial banks are regulated by Banking Regulation Act, 1949.
Merchant banks rules and regulations designed by SEBI.
Involves
Commercial includes general banking business
Merchant includes consultancy type business
Nature of loan
Commercial banks give out debt-related loans
Merchant banks give out equity-related
Risk factor
Risk is less in commercial bank
Risk is comparatively more in merchant bank
Customer
Caters to the needs of general public.
Caters to the needs of corporate firms.