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Commercial Bank vs. Small Finance Bank: What's the Difference?

Edited by Aimie Carlson || By Janet White || Published on December 6, 2023
Commercial banks offer financial services to the public for profit, while development banks provide funding for economic development projects.

Key Differences

Commercial banks primarily deal with deposits and loans for individuals and businesses. Development banks focus on financing large-scale infrastructure and development projects.
The main aim of commercial banks is to earn profit through interest and service fees. In contrast, development banks aim to support economic growth and development, often with governmental backing.
Commercial banks offer services like savings accounts, credit cards, and mortgages. Development banks provide long-term capital for national projects, such as energy or transportation infrastructure.
Commercial banks cater to the day-to-day financial needs of the public and businesses. Development banks often work in partnership with governments and international organizations for larger societal benefits.
The clientele of commercial banks usually includes individuals, small businesses, and corporations. Development banks, on the other hand, deal with government entities, large corporations, and sometimes international projects.

Comparison Chart

Primary Focus

Providing banking services for profit
Funding economic and infrastructure projects

Main Services

Deposits, loans, credit cards, mortgages
Long-term financing, project funding

Target Clients

Individuals, small businesses, corporations
Governments, large projects, international aid

Profit Objective

High profit orientation
Developmental and societal growth focus


A local bank offering checking accounts
A bank funding a national highway project

Commercial Bank and Small Finance Bank Definitions

Commercial Bank

Commercial banks provide everyday financial services to the public and businesses.
A commercial bank issued a mortgage for my new home purchase.

Small Finance Bank

Development banks often work with governmental and international organizations.
Our country's development bank collaborated with the UN for sustainable projects.

Commercial Bank

Commercial banks operate in a competitive market environment.
I chose my commercial bank based on their excellent customer service.

Small Finance Bank

A development bank provides funding for large-scale development projects.
The development bank financed a new renewable energy project in our region.

Commercial Bank

Commercial banks aim to make profits through various banking services.
My commercial bank charges a fee for international transactions.

Small Finance Bank

Development banks provide long-term capital for societal and economic progress.
The development bank played a crucial role in funding the new public hospital.

Commercial Bank

Commercial banks are key players in the consumer banking industry.
The commercial bank offered me a competitive interest rate on my deposit.

Small Finance Bank

Development banks may prioritize social and economic benefits over profit.
The development bank initiated a program to support small rural businesses.

Commercial Bank

A commercial bank is a financial institution offering deposit and loan services.
People often go to a commercial bank to open savings accounts.

Small Finance Bank

Development banks focus on economic growth and infrastructure development.
A national development bank supported the construction of the new highway.


How do commercial banks make money?

Through interest on loans, service charges, and fees.

What’s the main goal of a development bank?

To support economic growth and infrastructure development.

What is a development bank?

An institution that provides funding for large-scale development and infrastructure projects.

What is a commercial bank?

A financial institution offering services like loans and deposits for profit.

Can individuals open accounts in development banks?

Generally, no, as they focus on large projects and governmental needs.

Do commercial banks fund large infrastructure projects?

Typically, they don’t, as this is the role of development banks.

How do development banks impact the economy?

By financing projects that stimulate economic growth and development.

Do development banks offer personal loans or mortgages?

Usually not, as they focus on larger development projects.

Are commercial bank deposits insured?

In many countries, they are insured up to a certain limit.

Do commercial banks offer investment services?

Yes, many offer services like wealth management and investment advice.

What are examples of development bank projects?

Infrastructure projects like roads, bridges, and energy plants.

Are interest rates different between these two types of banks?

Yes, development banks often have lower rates for project financing.

Can businesses get loans from development banks?

If they are involved in relevant large-scale projects, yes.

Do commercial banks contribute to societal development?

Indirectly, by supporting businesses and individuals financially.

Are development banks usually government-owned?

Many are, or they operate with significant governmental support.

What is the role of commercial banks in the economy?

They facilitate day-to-day financial transactions and lending.

How do development banks select projects to fund?

Based on developmental impact, feasibility, and strategic importance.

Do development banks offer checking or savings accounts?

No, these are typical services of commercial banks.

Can a commercial bank also function as a development bank?

Typically, these functions are separate due to differing objectives and scale of operations.

What is the significance of development banks in underdeveloped countries?

They play a crucial role in funding infrastructure and development to stimulate growth.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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