Question

Write short note on types of banks.

Answer 1

Commercial Banks

Commercial banks are the banks that accept money in the form of deposits from the public and give loans and advances to its customers by charging interest. They mobilize small savings and promote the growth of trade and commerce. Generally, commercial banks lend money for a short period only. They only provide working capital to the organizations. But in recent times commercial banks are providing long-term capital also to the organizations


Co-operative Banks

Co-operative Banks are the banks that usually provide short term, medium term, long term credit to agricultural purposes. Co-operative Banks also provides loans to small-scale artisans. Co-operative Banks usually provide credit facilities to farmers, small-scale industries, etc at a cheaper rate of interest. Co-operative Banks are mainly situated in rural areas and can also be seen in urban areas.


Central Bank

Every country has its own Central Bank. The Central bank aims at non-profit functioning. It regulates the monetary and credit system of the country. Central Bank acts as controller, supervisor, and regulator of the activities of commercial banks and other financial institutions in the country. The Central bank is considered as the apex institution of the country’s money market


Industrial Banks

Industrial banks are also called as Investment Banks. Industrial banks provide long-term loans to the industries. Industries require long-term capital for buying machinery, construction of buildings, expansion of operations, etc. These capital required by industries is provided by industrial banks for industrialists to grow their businesses. Industrial banks accept long-term deposits from the public. They secure capital by issuing shares and debentures.


Agricultural Banks

Agricultural Banks are the banks which provide agricultural credit to the farmers. The Agricultural Development Banks provide medium term and long term credit. Some examples of Agricultural Banks in India are Agricultural Finance Corporation, Agricultural Refinance and Development Corporation, National Bank for Agricultural and Rural Development (NABARD).Agricultural Banks are established by the government to promote agricultural credit in the country.



Savings Bank

Savings Banks mainly concentrates on the mobilization of savings of the people. In India Post offices run by Postal department act as savings banks. Since Commercial banks are providing these facilities of savings banks to the public, the need for separate savings bank is fading.



Foreign Exchange Banks

Foreign Exchange Banks are the banks which provide finance for foreign trade.These banks accept deposits from the public. Foreign Exchange Banks are specialized banks in providing credit for the foreign trade. These banks usually have their branches in foreign countries for uninterrupted functioning of their services.But in recent times commercial banks are also financing foreign trade.



Exchange Banks

Exchange Banks are the banks which operate by financing the imports and exports of the country. These banks are mainly concerned with providing foreign exchange to their customers and help to promote international trade. They also offer to discount of foreign bills of exchange to their customers.



Private Bankers

Private Bankers are the individuals who do banking business individually or as a partnership. It is purely an unorganized sector.Most of the private bankers do not receive or accept any deposits from the public, they do banking business with their own capital. They lend money to the people for high-interest rates.