The organization, pi and functions of a central bank and, a commercial bank are basically different from each other. Though both are monetary institutions, yet their working differs in theory as well as in practice. We list below the main points of difference between the two organizations.
1. The central bank is an apex bank in a country.
2. It is established under an Ordinance or an Act. The SBP in Pakistan is now governed by the SBP Act, 1956.
3. Central bank possesses the monopoly of note issue.
4. It is not primarily a profit making enterprise.
5. Central bank maintains the foreign exchange reserves of the Country.
6. A central bank is normally owned by the State. It can also have a mixed ownership. SBP in Pakistan had a mixed ownership before nationalization of bank in 1974. Now the State holds full ownership by paying compensation to the shareholders.
7. The central bank does not deal directly with public.
8. A central bank is financial adviser and banker to the government.
9. A central bank is the lender of the last resort. It is the leader of money market. It performs also the clearing house functions.
10. A central bank is the controller of credit in the country.
1. Commercial bank is a constituent unit of banking system. It works under the guidance of the central bank.
2. The commercial bank is established under Companies Ordinance 1984.
3. The commercial bank is not authorized to issue notes.
4. The primary objective of the commercial bank is to earn profit for its shareholders.
5. A commercial bank only deals in foreign exchange under the supervision and direction of the central bank.
6. The commercial banks are generally privately owned enterprises. After nationalization of banks in Pakistan the Federal Government assumed ownership of nationalized banks. All now have been denationalized except HBL and UBL.
7. A commercial bank has direct dealing with the public.
8. A commercial bank is an adviser and banker to the general public.
9. A commercial bank maintains cash reserve with the central bank. It acts in accordance with the directives issued by the central bank.
10. A commercial bank is only a member of the money market. It has no right or power to control credit.
MOT testing is a mandatory automobile testing for two wheelers, three wheelers or 4 wheeler vehicles in UK. It is also applicable to heavy vehicles carrying goods. More >>
There are various distinctive sorts of home upgrades accessible to shoppers. More >>
The task of correct Bookkeeping are often a frustrating job for any business owner. Because the owner you either do all the work yourself, or pay somebody on your employees to try to to the duty. More >>
Fat Duck Digital, a creative and marketing firm based in Los Angeles, CA, announces the launch of Fat Duck International. Fat Duck International is focused on servicing the brand development and marketing needs for China based entities interested in a Western aesthetic. More >>
We also provide wardrobe essentials like universal hangers, steam irons, ironing boards, laundry bags, jiffy wardrobe steamers etc. More >>
Objectives of Business means the purpose for which the business is established. It is generally believed that the main objective of business is ta make profit and avoid loss. More >>
Barter System - Barter System is that system in which goods are exchanged for goods - Barter System More >>
Functions of Money - Functions of Money as a Medium of Exchange, Measure of Value, Deferred Payment, Store of Value - Functions of Money More >>
The importance of business is that it provides products or services to customers. More >>
The partners of a firm are broadly divided into three main categories. General Partners, Special Partners and Other Partners. More >>