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(i) Commercial Banks: Commercial banks are institutions dealing in money. These are
governed by Indian Banking Regulation Act 1949 and according to it banking means accepting
deposits of money from the public for the purpose of lending or investment. There are two types
of commercial banks, public sector and private sector banks. Public sectors banks are those in
which the government has a major stake and they usually need to emphasise on social objectives
than on profitability. Private sector banks are owned, managed and controlled by private
promoters and they are free to operate as per market forces. There are 20 nationalised public
sector banks like SBI, PNB, IOB etc., and other private sector banks represented by HDFC Bank,
ICICI Bank, Kotak Mahindra Bank and Jammu and Kashmir Bank.
(ii) Cooperative Banks: Cooperative Banks are governed by the provisions of State Cooperative
Societies Act and meant essentially for providing cheap credit to their members. It is an
important source of rural credit i.e., agricultural financing in India.
(iii) Specialised Banks: Specialised banks are foreign exchange banks, industrial banks,
development banks, export-import banks catering to specific needs of these unique activities.
These banks provide financial aid to industries, heavy turnkey projects and foreign trade.
(iv) Central Bank: The Central bank of any country supervises, controls and regulates the
activities of all the commercial banks of that country. It also acts as a government banker. It
controls and coordinates currency and credit policies of any country. The Reserve Bank of India
is the central bank of our country.

Functions of Commercial Banks:

Banks perform a variety of functions. Some of them are the basic or primary functions of a bank
while others are agency or general utility services in nature. The important functions are briefly
discussed below:
1. Accepting Deposits: The most important function of commercial banks is to accept deposits
from the public. Various sections of society, according to their needs and economic condition,
deposit their savings with the banks. For example, fixed and low income group people deposit
their savings in small amounts from the points of view of security, income and saving promotion.
On the other hand, traders and businessmen deposit their savings in the banks for the
convenience of payment.
Therefore, keeping the needs and interests of various sections of society, banks formulate various
deposit schemes. Generally, there are three types of deposits which are as follows:
(i) Current Deposits: The depositors of such deposits can withdraw and deposit money whenever
they desire. Since banks have to keep the deposited amount of such accounts in cash always, they
carry either no interest or very low rate of interest. These deposits are called Demand Deposits
because these can be demanded or withdrawn by the depositors at any time they want. Such
deposit accounts are highly useful for traders and big business firms because they have to make
payments and accept payments many times in a day.