What is commercial bank??

A commercial bank (or business bank) is a type of financial institution and intermediary. It is a bank that lends money and provides transactional, savings, and money market accounts and that accepts time deposits.[1]

Origin of the word The name bank derives from the Italian word banco "desk/bench", used during the Renaissance era by Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth.[2] However, traces of banking activity can be found even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome that of the Imperial Mint.[3] [edit] The role of commercial banks Commercial banks engage in the following activities:

processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means issuing bank drafts and bank cheques accepting money on term deposit lending money by overdraft, installment loan, or other means providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures safekeeping of documents and other items in safe deposit boxes

sales, distribution or brokerage, with or without advice, of: insurance, unit trusts and similar financial products as a financial supermarket cash management and treasury merchant banking and private equity financing traditionally, large commercial banks also underwrite bonds, and make markets in currency, interest rates, and credit-related securities, but today large commercial banks usually have an investment bank arm that is involved in the mentioned activities[clarify].

[edit] Types of loans granted by commercial banks [edit] Secured loan A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral in the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally lent to the borrower, for example, foreclosure of a home. From the creditor's perspective this is a category of debt in which a lender has been granted a portion of the bundle of rights to specified property. If the sale of the collateral does not raise enough money to pay off the debt, the creditor can often obtain a deficiency judgment against the borrower for the remaining amount. The opposite of secured debt/loan is unsecured debt, which is not connected to any specific piece of property and instead the creditor may only satisfy the debt against the borrower rather than the borrower's collateral and the borrower. A mortgage loan is a very common type of debt instrument, used to purchase real estate. Under this arrangement, the money is used to purchase the property. Commercial banks, however, are given security a lien on the title to the house - until the mortgage is paid off in full. If

the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it. In the past, commercial banks have not been greatly interested in real estate loans and have placed only a relatively small percentage of assets in mortgages. As their name implies, such financial institutions secured their earning primarily from commercial and consumer loans and left the major task of home financing to others. However, due to changes in banking laws and policies, commercial banks are increasingly active in home financing. Changes in banking laws now allow commercial banks to make home mortgage loans on a more liberal basis than ever before. In acquiring mortgages on real estate, these institutions follow two main practices. First, some of the banks maintain active and well-organized departments whose primary function is to compete actively for real estate loans. In areas lacking specialized real estate financial institutions, these banks become the source for residential and farm mortgage loans. Second, the banks acquire mortgages by simply purchasing them from mortgage bankers or dealers. In addition, dealer service companies, which were originally used to obtain car loans for permanent lenders such as commercial banks, wanted to broaden their activity beyond their local area. In recent years, however, such companies have concentrated on acquiring mobile home loans in volume for both commercial banks and savings and loan associations. Service companies obtain these loans from retail dealers, usually on a nonrecourse basis. Almost all bank/service company agreements contain a credit insurance policy that protects the lender if the consumer defaults. [edit] Unsecured loan Unsecured loans are monetary loans that are not secured against the borrower's assets (i.e., no collateral is involved). There are small businesss unsecured loans such as credit cards and credit lines to large

corporate credit lines. These may be available from financial institutions under many different guises or marketing packages:

bank overdrafts

An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the POSITIVE balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.

corporate bonds credit card debt credit facilities or lines of credit personal loans

What makes a bank limited liability company A corporate bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money in order to expand its business.[1] The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date. (The term "commercial paper" is sometimes used for instruments with a shorter maturity.) Sometimes, the term "corporate bonds" is used to include all bonds except those issued by governments in their own currencies. Strictly speaking, however, it only applies to those issued by corporations. The bonds of local authorities and supranational organizations do not fit in either category.[clarification needed] Corporate bonds are often listed on major exchanges (bonds there are called "listed" bonds) and ECNs like Bonds.com and MarketAxess, and the coupon (i.e. interest payment) is usually taxable. Sometimes this coupon can be zero with a high redemption value. However, despite being listed on exchanges, the vast majority of trading volume in corporate bonds in most developed markets takes place in decentralized,

dealer-based, over-the-counter markets. Some corporate bonds have an embedded call option that allows the issuer to redeem the debt before its maturity date. Other bonds, known as convertible bonds, allow investors to convert the bond into equity. Corporate Credit spreads may alternatively be earned in exchange for default risk through the mechanism of Credit Default Swaps which give an unfunded synthetic exposure to similar risks on the same 'Reference Entities'. However, owing to quite volatile CDS 'basis' the spreads on CDS and the credit spreads on corporate bonds can be significantly different.

Definition of 'Commercial Bank'

A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees.

Investopedia explains 'Commercial Bank'

Commercial banking activities are different than those of investment banking, which include underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients. Some commercial banks, such as Citibank and JPMorgan Chase, also have investment banking divisions, while others, such as Ally, operate strictly on the commercial side of the business.

History & Mission Statement

The Commercial Bank has served Oglethorpe County and the surrounding area since 1924. Started just before the Great Depression, The Commercial Bank has grown strong and helped this area prosper by working hard to serve our wonderful customers. The Commercial Bank strives to offer a wide array of banking services to our customers, including Checking, Savings Accounts, Consumer and Mortgage Loans, Safe Deposit Boxes, and other services. MISSION STATEMENT To serve our market with quality financial products and services and to continue our commitment to community involvement. We will strive for a consistent maximum return to our shareholders and develop our employees through training, incentives, and teamwork. We will build on our heritage while adapting to future changes

Introduction History
Established in 1899
First Commercial Bank is the outgrowth of merger of the Savings Bank of

Taiwan (established in 1899), Chia-I Bank (established in 1905), The Commercial and Industrial Bank of Taiwan (established in 1910), and HsinKao Bank (established in 1916). Of these four banks, the Savings Bank of Taiwan and The Commercial and Industrial Bank of Taiwan were previously jointly owned by Chinese and Japanese, while Chia-I Bank and Hsin-Kao Bank were originally owned entirely by Chinese in Taiwan. The Japanese eventually controlled the managements, and the amalgamation took place in its final form in 1923.

Renamed as First Commercial Bank of Taiwan in 1949

After Taiwan was restored to the Republic of China in 1945, the Bank was taken over from the Japanese. Though facing many new problems, it continued its operations and steady growth. In 1949, the Bank was renamed the First Commercial Bank of Taiwan. It has continued to expand on a broad scale under the guidance of the Government and the Board of Directors and with the assistance of the dedicated staff, and above all, the unceasing patronage of the customers. The rate of progress has steadily risen in the last decade as Taiwan trade volume accelerated. For Simplification and internationalization, the name was shorten to first Commercial Bank in 1976.

Foreign Exchange Business Started in 1967

In 1967, the Bank obtained its foreign exchange business license and became one of the major foreign exchange banks in Taiwan. In order to provide more efficient services to our customers, the Bank installed on-line system in 1978 and joined the SWIFT in 1985. The bank offers the business service areas of export, import, remittance, foreign currency deposits, and margin trading, etc. As of June 2002, the Bank has already had 10 overseas branches located in London, New York, Los Angeles, Hong Kong, Tokyo, Guam, Singapore, Palau and Phnom Penh, 2 representative offices in Bangkok and Ho Chi Minh City as well as a wholly-owned subsidiary named First Commercial Bank (USA) located in Alhambra, California and its three branches (City of Industry Branch, Silicon Valley Branch and Irvine Branch). The Bank has established a correspondent network with more than 1,600 major banks all over the world. This extensive business network at home and abroad has facilitated the Bank to offer worldwide services to customers.

Partially Privatized in 1998

In January 1998, Taiwan Provincial Government released part of its ownership and reduced the total government-owned shares of this bank to 39.36 %, First Commercial Bank therefore completed its privatization process at that time and became the largest private commercial bank in Taiwan. Following the privatization, the Bank has more autonomy to make reinvestment decisions. In order to provide more services to meet the customer's needs, the Bank is making efforts to diversify its products by setting up subsidiaries, such as FCB Leasing Co. and FCB Insurance Agency Co., Ltd. expecting to develop into a large financial group.

Strategy and Goals

For years "Customer First, Service Foremost" has been the Bank's motto strictly observed by all staff members. With this guideline in mind, the Bank has rendered extensive services with personal touch to industrial and commercial enterprises. Through the process of careful planning, implementation, and evaluation, the Bank has improved its operations by leaps and bounds from time to time. As a result of every effort made, volume of business has been increased rapidly, and the Bank has made significant contributions to the development of national economy. As a profit-driven institution, portfolio diversification and searching for the best market niche, under sound risk control, will be our main tasks and emphasis. The Bank not only keep pace with economic development and market trends in the future, but also change our banking strategy to respond to new development while maintaining a forward looking analysis.

Commercial Bank Disadvantages

Commercial banks, despite their reputation, have a number of disadvantages. Commercial banks, especially commercial banks which are large and well-established, are usually a person's first choice for managing their money and for getting loans. Potential customers should be careful of commercial banks though, because while they do offer some safety and security, there are still disadvantages for using them.

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Advantage & Disadvantage of a Commercial Bank Community Bank Vs. Commercial Bank

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Loan Approvals
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One disadvantage of using a large, commercial bank can easily be seen if you're trying to get a loan. Unlike a local bank, or a relatively small bank, a larger, commercial bank

will have to put a loan through several different departments. Beyond that, you may have to have dozens of people sign off on a single loan. This can lead to many more people getting involved in saying yes or no to your loan, and it may lead to a lot more negotiation than you were hoping to conduct. This is especially true for a simple, relatively straightforward home or business loan. Rigid Standards
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Another downside of using commercial banks is that they have very rigid standards more often than not. All banks have to follow the financial laws put forth by the U.S. government, but commercial banks may treat their own, additional rules as if they're set in stone. Again, this is most often seen in the loan process. Commercial banks, due to their size and the sheer volume of the market that they command, are often less likely to make concessions to customers. This can lead to a very "my way or the highway" attitude from a commercial bank.

Security
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One of the biggest concerns that a person has with their bank is whether or not their money is insured. If you put $10,000 in a savings account, you want to be sure that money will be available, regardless of what expenses your bank has to deal with. This is why the U.S. government created FDIC insurance, which insures up to $100,000 worth of money (though it's more than $200,000 until 2013) per depositor so that those depositors can have faith in the bank. Many commercial banks, because of how they choose to run their business, forgo this government insurance and instead offer private insurance. This private insurance isn't as reliable as the government's insurance, and it makes many

depositors nervous to be out from under the government's protection.

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Commercial banks form a significant part of the countrys Financial Institution System. Commercial Banks are those profit seeking institutions which accept deposits from general public and advance money to individuals like household, entrepreneurs, businessmen etc. with the prime objective of earning profit in the form of interest, commission etc. The operations of all these banks are regulated by the Reserve Bank of India, which is the central bank and supreme financial authority in India. The main source of income of a commercial bank is the difference between these two rates which they charge to borrowers and pay to depositers. Examples of commercial banks ICICI Bank, State Bank of India, Axis Bank, and HDFC Bank.

Activities of Commercial Banks

Primary Functions of Commercial Banks:

Deposit Acceptance: Being a short term credit dealer, the commercial banks accept the savings of public in the form of following deposits:

Fixed term deposits Current A/c deposits Recurring deposits Sving A/c deposits Tax saving deposits Deposits for NRIs

Lending Money: a second major function is to give loans and advances and thereby earn interest on it. This function is the main source of income for the bank. Overdraft facility: Permission to a current A/c holder of withdrawal
more than to what he has deposited.

Loans & advances: A kind of secured and unsecured loans against some kind of security. Discounting of bill of exchange: in case a person wants

money immediately, he/she can present the B/E to the respective commercial bank and can get it discounted. Cash credit : Facility to withdraw a certain amount of money on a given security.
Secondary Functions of Commercial Banks:

Agency functions: Bank pays on behalf of its customers as an agent and gets paid fee for agency functions such as:

Payment of taxes, bills Collection of funds through bills, cheques etc. Transfer of funds Sale-purchaseof shares and debentures Collection/Payment of dividend or interest Acts as trustee & executor of properties Forex Transactions General Utility Services: locker facility

Credit Creation: It is one of the most outstanding function of commercial banks. A bank creates credit on the basis of its primary deposits. It further lends the money which people has depositted with the bank also charge interest on this money, which is much higher than what it actually pays to depositer. Thus bank generates money for itself