At first look on Commercial Banking, it can be conceptualised as a kind of financial institute backed for commercial use like that of business organizations, traders, and general public whose mission is to oversee and provide financial assistance regard business loans, depository investments and other shares and debentures etc. It is unlike differentiated from an Investment Banking in terms of where latter is all about assessing trading standards, using underwriters to know net value of the asset and then give loans or securities against cash trade etc whereas there are no underwriters involved in case of commercial banks. It actually takes case of the overall profitability and liquidity of the entire business or organization or that of general public. It also takes Net income for the bank as it modifies and transforms the entire net assets to amass huge gains for the commercial bankers. The primary role or activities played by the commercial banks as a nation’s lead financial bodies are:
- As in case of any banks, these banks also perform dual core role of monitoring as well as maintaining a statistic over the payments being made in form of Electronic transfers, by means of paper, cross-state transactions etc.
- Issue different bank draft, cheques, term deposits, instalment loans, security tools like shares, debentures etc in wake of cash transaction to maintain an overall healthy environment between bank, investors, trading standards etc.
- Maintenance of security of lockers, deposits and other key and vital statistics in form of key financial documents.
- These banks also helps in wide array of other activities like managing total units of insurance, market linked plans, and provides advisory assistance to such firms so as to have a good financial condition prevailing in the market.
- Globally they also act as an premiere financial board for acting as main source of providing different cards like Debit or credit cards, smart cards and also maintaining note of the transactions done in banks or through cards etc.
- They also helps revive the economic conditions of a country by acting as advisory bodies for different sectors ranging from agriculture to even general public and satisfying their economic needs.
However having discussed the positives, let’s ponder upon the drawbacks of the commercial banks as well which are
ü Approving loans process is highly time consuming as it gets passed through a wide array of financial advisors like underwriters, managers etc who follow strict adherence to rules and obligations of the government while approving or non approval of loans.
ü Securing all investments and deposits is the biggest prima facie issue in case of these banks as though following stringiest of norms, do offer assistance in form of private insurance and thereby lose large chunk of money to defaulters.
Having said so, the commercial banks have acted in the past as a effective machinery in curbing the issue of economic crisis and the failing economies like Kenya and other small underdeveloped nations.