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Commercial Bank vs. Development Bank: What's the Difference?

Edited by Sumera Saeed || By Sara Rehman || Published on December 8, 2023
Commercial banks offer a wide range of services to all sectors, while small finance banks focus on financial inclusion by providing basic banking services to underserved segments.

Key Differences

Commercial banks are large-scale institutions offering diverse services like loans, deposits, and wealth management to all customer segments. Small finance banks, in contrast, specifically cater to small businesses, marginal farmers, and micro industries.
Sara Rehman
Dec 08, 2023
The client base of commercial banks includes large corporations, SMEs, and individual customers. Small finance banks focus on customers not adequately served by traditional banks, particularly in rural and semi-urban areas.
Sara Rehman
Dec 08, 2023
In terms of services, commercial banks provide a comprehensive suite including corporate banking, international trade financing, and treasury operations. Small finance banks primarily offer basic banking services like deposits, small loans, and remittance facilities.
Sumera Saeed
Dec 08, 2023
Commercial banks operate on a larger scale with a wider network and higher capital requirements. Small finance banks have lower capital requirements and operate with a focus on local communities and smaller regions.
Sara Rehman
Dec 08, 2023
Regulatory requirements for commercial banks are generally more stringent, reflecting their larger size and broader scope of operations. Small finance banks, while also regulated, have more relaxed norms to encourage financial inclusion.
Sara Rehman
Dec 08, 2023
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Comparison Chart

Services Offered

Broad range including loans, deposits, wealth management.
Focus on basic banking services like small loans and deposits.
Sara Rehman
Dec 08, 2023

Client Base

Diverse, including large corporations, SMEs, and individuals.
Targeted towards underserved segments like small businesses, marginal farmers.
Sara Rehman
Dec 08, 2023

Scale of Operation

Larger scale with a wider network.
Smaller scale, often localized to communities and regions.
Sara Rehman
Dec 08, 2023

Capital Requirements

Higher capital requirements.
Lower capital requirements.
Aimie Carlson
Dec 08, 2023

Regulatory Norms

More stringent regulatory requirements.
Relatively relaxed norms to promote financial inclusion.
Janet White
Dec 08, 2023
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Commercial Bank and Development Bank Definitions

Commercial Bank

A bank that provides loans, accepts deposits, and offers basic financial products.
Customers visited the commercial bank for loan applications.
Sara Rehman
Nov 24, 2023

Development Bank

A bank aiming to promote financial inclusion by offering basic banking services.
The small finance bank introduced no-frills accounts for low-income groups.
Sara Rehman
Nov 24, 2023

Commercial Bank

A full-service bank engaging in retail and corporate banking.
The commercial bank opened new branches in major cities.
Harlon Moss
Nov 24, 2023

Development Bank

A bank specialized in providing financial services to small business sectors.
The small finance bank offered microloans to local farmers.
Sumera Saeed
Nov 24, 2023

Commercial Bank

A financial institution offering a wide range of banking services.
The commercial bank launched a new digital banking platform.
Sara Rehman
Nov 24, 2023

Development Bank

A financial institution primarily providing small loans and deposit products.
The small finance bank’s savings schemes were popular among small traders.
Aimie Carlson
Nov 24, 2023

Commercial Bank

A bank that participates in international banking and trade financing.
The commercial bank played a key role in the international trade deal.
Harlon Moss
Nov 24, 2023

Development Bank

A bank with a mandate to serve marginalized sections of society.
The small finance bank conducted financial literacy programs in underserved communities.
Harlon Moss
Nov 24, 2023

Commercial Bank

A bank catering to businesses and individuals with various financial needs.
The commercial bank financed several large infrastructure projects.
Sara Rehman
Nov 24, 2023

Development Bank

A banking institution focusing on underserved and low-income customers.
The small finance bank opened branches in rural areas to serve more customers.
Sara Rehman
Nov 24, 2023

FAQs

Are small finance banks found in urban areas?

While they focus on rural and semi-urban areas, they can also operate in urban regions.
Janet White
Dec 08, 2023

Do commercial banks offer agricultural loans?

Yes, they provide a variety of loans, including for agriculture.
Janet White
Dec 08, 2023

Can commercial banks operate internationally?

Yes, many commercial banks have international operations.
Sara Rehman
Dec 08, 2023

Do commercial banks participate in government schemes?

Yes, they often collaborate in various government financial programs.
Sara Rehman
Dec 08, 2023

What is the typical customer of a small finance bank?

Small businesses, marginal farmers, and micro industries.
Sara Rehman
Dec 08, 2023

What is the main focus of a commercial bank?

To provide a wide range of financial services to all sectors.
Sara Rehman
Dec 08, 2023

Are small finance banks important for rural economies?

Yes, they play a crucial role in financial inclusion in rural areas.
Aimie Carlson
Dec 08, 2023

What defines a small finance bank?

Its focus on financial inclusion for underserved segments.
Sumera Saeed
Dec 08, 2023

Can a small finance bank grow into a commercial bank?

It's possible, but it would require meeting higher regulatory and capital requirements.
Harlon Moss
Dec 08, 2023

Do commercial banks offer insurance products?

Many commercial banks have partnerships to offer insurance products.
Harlon Moss
Dec 08, 2023

What kind of regulatory body oversees small finance banks?

They are typically regulated by national banking authorities.
Janet White
Dec 08, 2023

Is digital banking common in small finance banks?

Increasingly, they are adopting digital services to reach more customers.
Janet White
Dec 08, 2023

How do commercial banks contribute to the economy?

They provide essential financial services that fuel economic growth.
Janet White
Dec 08, 2023

Do small finance banks provide mortgage loans?

Their loan products usually focus on smaller, personal or business loans rather than large mortgages.
Aimie Carlson
Dec 08, 2023

Is customer service a focus in small finance banks?

Yes, they often emphasize personalized customer service, especially in local communities.
Sara Rehman
Dec 08, 2023

Do commercial banks offer wealth management services?

Yes, many offer comprehensive wealth management and investment services.
Aimie Carlson
Dec 08, 2023

Can individuals open savings accounts in commercial banks?

Yes, they offer a range of personal banking services, including savings accounts.
Harlon Moss
Dec 08, 2023

Are small finance banks a recent development?

They have emerged more prominently in recent decades to address financial inclusion.
Harlon Moss
Dec 08, 2023

Are commercial bank services more expensive than small finance banks?

This can vary, but commercial banks might have higher fees for certain services.
Aimie Carlson
Dec 08, 2023

Do commercial banks offer services for high-net-worth individuals?

Yes, they often have specialized services for high-net-worth clients.
Aimie Carlson
Dec 08, 2023
About Author
Written by
Sara Rehman
Sara Rehman is a seasoned writer and editor with extensive experience at Difference Wiki. Holding a Master's degree in Information Technology, she combines her academic prowess with her passion for writing to deliver insightful and well-researched content.
Edited by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.

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