Commercial Bank Definition and its functions

Commercial Bank Definition

What is commercial Bank

A commercial bank is a type of financial institution that offers a wide range of services, including accepting deposits, making business loans, and offering basic investment products. 

They make money by charging interest on loans, and offering financial products and services to customers. They also generate revenue by charging fees for account maintenance and other services. 

Commercial banks are typically for-profit organizations that are owned by shareholders. They are regulated by government agencies to ensure the safety and soundness of the bank and to protect consumers.

Functions of commercial Bank

Commercial banks perform a variety of functions to serve the financial needs of their customers. Some main functions of commercial banks include:

Accepting deposits: Commercial banks accept deposits from customers in the form of savings accounts, checking accounts, and certificates of deposit. These deposits are used to fund the bank's lending activities.

Making loans: Commercial banks make loans to businesses and individuals, and charge interest on those loans. They use the funds from deposits to make these loans.

Providing basic investment products: 

Commercial banks offer basic investment products such as savings accounts, Certificates of Deposit, and money market accounts to help customers save and grow their money.

Offering payment services: Commercial banks offer various payment services such as issuing credit and debit cards, and processing electronic payments.

Facilitating international trade: Many commercial banks have international operations, and they help facilitate international trade by providing services such as letters of credit and foreign exchange transactions.

Trust and Asset management: Many commercial banks offer Trust and Asset management services for their customers.

Providing online banking services: 

Commercial banks also provide online banking services that allow customers to access their accounts, pay bills, and transfer money over the internet.

Underwriting and issuing financial instruments: Some commercial banks are also involved in underwriting and issuing financial instruments such as bonds and stocks.

These are some main functions of commercial banks. Their services and functions vary depending on the size and location of the bank and the needs of their customers.

Types of commercial Bank

There are several types of commercial banks, which are generally classified based on their size and the services they offer. Some main types of commercial banks include:

Retail banks: These banks focus on providing services to individuals and small businesses, such as accepting deposits, issuing credit cards, and making consumer loans.

Investment banks: These banks specialize in underwriting and issuing securities, providing financial advice and services to companies, and managing assets for wealthy individuals and institutional clients.

Universal banks: These banks offer a wide range of services, including retail banking, investment banking, and insurance. They are often large, multinational institutions.

Community banks: These banks serve the needs of a specific local community, and typically have a smaller number of branches and services.

Online banks: These banks operate primarily online and offer many of the same services as traditional banks, but usually with a reduced cost structure and higher interest rate on deposits.

Cooperative banks: These banks are owned by their members and operate on a not-for-profit basis. They are commonly found in Europe, where they are known as “credit unions.”

These are some main types of commercial banks. Banks may also be classified based on their ownership structure, such as publicly traded banks and privately held banks.

Furthermore, there are some more types of commercial banks such as Islamic Banks, Development Banks, Industrial Banks, etc.

Pakistan Commercial Banks List

Pakistan,s commercial Bank

There are many commercial banks in Pakistan, some major ones include:

• National Bank of Pakistan (NBP)
• Habib Bank Limited (HBL)
• MCB Bank Limited
• United Bank Limited (UBL)
• Standard Chartered Bank (Pakistan) Limited
• Faysal Bank Limited
• Bank Alfalfa Limited
• Silk bank Limited
• Askari Bank Limited
• Summit Bank Limited.

National bank of Pakistan

The National Bank of Pakistan (NBP) is one of the largest commercial banks in Pakistan. It is a state-owned bank which operates as a public sector entity. 

It was founded in 1949 and is headquartered in Karachi, Pakistan. NBP offers a wide range of banking services including personal banking, corporate banking, investment banking, and Islamic banking. 

It also has a large network of branches and ATMs across the country, as well as international branches in several countries. NBP also provides services such as foreign exchange, remittances, trade finance, and other financial services. 

The bank also has a presence in the Middle East and Central Asia. The bank is considered as one of the most profitable banks of Pakistan with a strong market position.

Habib Bank Pakistan

Habib Bank Limited (HBL) is one of the largest commercial banks in Pakistan. It is a private sector bank and was founded in 1941. 

The bank is headquartered in Karachi, Pakistan and has a large network of branches and ATMs across the country, as well as international branches in many countries including the Middle East, Africa, and Asia. 

It offers a wide range of banking services including personal banking, corporate banking, investment banking, and Islamic banking. 

HBL is considered as the largest commercial bank in Pakistan in terms of assets and deposits. The bank is also known for its innovative banking services and digital banking platform. It also has a strong presence in the corporate and investment banking segment. The bank is also recognized for its CSR activities as well.

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