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Questions
Distinguish between the Central Bank and the Commercial Bank.
Explain five differences between a Central Bank and a Commercial Bank.
State three differences between a Central Bank and a Commercial Bank.
Differentiate between central bank and commercial bank.
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Solution
| Sr. No. | Basis of Distinction | Central Bank | Commercial Bank |
| 1. | Position or status | It is the apex institution of a country's banking system. | It is one of the banks in the country. |
| 2. | Ownership | It is owned by the Government. | It is generally owned by the shareholders. |
| 3. | Aim | Its aim is to serve the country's interest. | Its aim is to earn profit. |
| 4. | Number | There is only one central bank in a country. | There are several commercial banks in the country. |
| 5. | Main client | It is a banker to the Government. | It is a banker to the general public. |
| 6. | Issue of notes | It has the monopoly over the issue of notes. | It cannot issue notes. |
| 7. | Relationship with other banks | It controls all other banks. | It functions under the control of the central bank. |
| 8. | Designation of the Chief Executive | Its chief is called "Governor''. | Its chief executive is called "Chairman". |
| 9. | Loans | The central bank provides loans and advances to banks and other financial institutions. | The commercial bank grants loans and advances to businessmen, industries and people. |
Notes
Students can refer to the answer according to their question and preferred marks.
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