a. A commercial bank is a financial institution that deals with money.

b. It is governed by the Indian Banking Regulation Act 1945. The act defines a commercial bank institution that accepts the deposit of money from the public for the purpose of lending or investment.

c. There are two types of commercial bank public banks and private sector banks.

d. A public bank is a bank in which the government has a major stake and works on the principle of welfare of the state rather than earning a profit.

e. A private bank is a bank which is owned, controlled and managed by a private individual.

The functions of a commercial bank are explained below:

a. The main function of a bank is to accept deposit from the public. There are three types of deposit:

i. Current account deposit: These deposits are the deposit which can be withdrawn to the extent of the balance at any time.

ii. Saving account: The main aim of this type of account is to increase the habit of saving in individuals. The bank pays a rate of interest on the deposit held in these banks. This rate of interest is decided by the central bank of the country. There are certain restrictions on the number of withdrawals and the amount of withdrawals during a given period.

iii. Fixed account deposit: These deposits are also called time deposits as they are for a fixed period of time. The rate of interest given by the bank on this type of deposit account is higher than that of a savings account.

b. Lending fund: The central bank lends out loans and advances from the deposit collected earlier. This is in the form of overdraft, cash credits, discounting trade bills, term loans, consumer credits, and other miscellaneous advances.

c. Cheque facility: Cheque is the most developed instrument and a unique feature of the banks for the withdrawal of deposits. It is a very convenient and inexpensive mode of exchange. There are two types of cheques:

i-Bearer cheques: These cheques are encashable immediately at bank counters.

ii- Crossed cheques: These cheques are to be deposited only in the payee's account.

d. Remittance of funds: The banks provide the facility of transfer of funds from one place to another on account of the interconnectivity of branches. This is administered through Bank draft, pay orders and mail transfers on a nominal commission charge.

e. Allied services: The allied services include bill payment, locker facility, underwriting service, buying and selling of shares and debentures, collection of dividend, payment of insurance premium.