Ch 1Commercial Banking — Class 11 Banking and Insurance, concept-first.

A commercial bank is a financial institution that accepts deposits of money from the public, which are repayable on demand or after a fixed period, and lends that money to individuals, traders, farmer…

The functions of a commercial bank are conveniently grouped under three heads — primary functions, secondary (agency) functions, and general utility functions.

Commercial banks in India can be classified in several ways — by ownership, by area of operation, and by whether they are included in the second schedule of the country's central banking law.

The balance sheet of a commercial bank is a statement, drawn up at a particular date, that shows what the bank owes (its liabilities) and what it owns (its assets).

The income statement — usually presented as the profit and loss account — of a commercial bank shows how it earned its income during a period and what it spent to earn that income, so that the net pro…

Credit creation is the process by which the commercial banking system, taken as a whole, multiplies the community's deposits far beyond the amount of cash originally deposited with it.

Portfolio management by a commercial bank means the way it distributes its funds among the various kinds of assets it can hold — cash, near-cash items, investments and loans — so as to earn the highes…

Nationalization of commercial banks means the transfer of the ownership and control of privately owned banks to the government.

In a developing economy such as India's, commercial banks are far more than convenient places to keep money — they are among the most powerful instruments available for accelerating economic growth.