Your friend is often confused about the meaning of commercial and central bank

cbse
business-services

#1

Your friend is often confused about the meaning of commercial and central bank. He thought
that they two are similar. How will you make him understand?


#2

I would tell him the following differences
(i) The central bank is the apex monetary institution, which has been specially empowered to exercise control over the hanking system of the country. The commercial bank, on the contrary, is a constituent unit of the hanking system.
(ii) The central bank does not operate with a profit motive. The primary aim of the central bank is to achieve the objectives of the economic policy of the government and maximise the public welfare through monetary measures. The commercial banks, on the other hand, have profit earning as their primary objective.
(iii) The central bank js generally a state-owned institutions, while the commercial banks are normally privately owned institutions.
(iv) The central bank does not deal directly with the public. The commercial banks, on the contrary, directly deal with the public.