Question

Give five points of difference between Commercial and Central Bank.

Name the bank which has sole authority to issue currency in India. Mention three ways it differs from Commercial bank.

Answer 1

	Central Bank	Commercial Bank
1.	It is the top institution in the nation's banking and financial system.	The financial institutions known as commercial banks are focused on offering banking securities to the public and businesses.
2.	The central bank is government owned.	Although most commercial banks are privately held, the government may also own some of them.
3.	The central bank's main goal is to control and regulate the nation's banking and financial system in the public interest for the welfare of the nation.	Offer deposits, loans, and other financial services to people, companies, and the government.
4.	The county's central bank is the only body authorised to issue currency notes.	Commercial banks create credit rather than issuing monetary notes.
5.	The government and other banks use the central bank as a bank.	A commercial bank serves the general public as a banker.

Answer 2

The Reserve Bank of India (RBI) is the only bank with the sole authority to issue currency in India.

Basis	Central Bank	Commercial Bank
(i) Meaning	The central bank is an apex institution of the monetary and banking structure of the country.	It just operates under the guidelines of the central bank.
(ii) Object	Its main objective is to promote social welfare.	Its main objective is to earn profit.
(iii) Ownership	The central bank is generally a government-owned institution.	Commercial banks may be both privately owned or government-owned institutions.
(iv) Note-issue	It has the monopoly right of note-issue.	Commercial banks do not have such rights.
(v) Banker	It is a government banker and a banker of commercial banks. It does not have direct public dealings.	A commercial bank is a banker only for the general public. It has direct public dealing.
(vi) Number	There can be only one central bank with a few offices in a country.	There are a number of commercial banks in every country with a large number of branches all over the country and also even abroad.
(vii) Credit	It controls credit.	It creates credit.