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Question
Distinguish between the following:
Commercial bank & Central bank
Solution
| Basis of Difference |
Commercial Bank | Central Bank |
| Objective | The main objective of a commercial bank is to make profits. |
The main objective of the central bank is to regulate and control the functioning of other banks. |
| Issue of notes |
It cannot issue currency notes and coins. |
It has the exclusive right to issue currency notes and coins. |
| Deposits | It accepts deposits from the general public. |
It does not accept deposits from the general public. |
| Public dealings |
It directly deals with the general public. |
It does not directly deal with the general public. |
| Ownership | It can be owned by private players or the Government. |
There is only one central bank in India, i.e., RBI. |
| Number | There are many commercial banks in India. |
There is only one central bank in India, i.e., RBI. |
| Monetary Policy | The commercial banks do not frame any monetary policy. | The Central bank frames the monetary policy and credit policy. |
| Monitoring | The commercial bank does not keep check on the Central bank. | The Central bank keeps a check on the working of the commercial banks. |
| Printing of currency | The commercial bank cannot print currency notes. | The central bank can print currency notes. |
| Function | The main function is to accept deposits from public for lending to industry and others. | The main function of the central bank (RBI) is to regulate money supply in the country. |
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