Difference between Central Bank and Commercial Bank

This article will help you to learn about the difference between central bank and commercial bank.

Difference between Central Bank and Commercial Bank

(a) The central bank acts as the supreme monetary authority of the country with wide powers to control credit and currency of the country. But a commercial bank has no such powers.

(b) The central bank does not exist to make profits. But commercial banks are organised for maximum profits for their owners.

(c) The central bank is the ultimate source of money supply, but a commercial bank is not so.

(d) The central bank acts as the banker to the government, but other banks do not acts as a rule in this capacity.

(e) A commercial bank undertakes risky business activities and may fail. But the central bank never fails because it has government backing.

(f)The central bank does not accept deposits from the public, but it is one of the important functions of a commercial bank.

(g) The central bank is subordinate to the State and as such most of the central banks in the world are now state-owned and state-managed. But commercial bank is most of the countries are privately owned and privately managed; there is however, a growing trend towards the nationalization of even commercial banks in many countries such as India.

(h) The central bank issues paper notes; in fact, it enjoys the monopoly power in this matter. But other banks do not enjoy this power.