Introduction

In this article you will learn about "Difference Between Central Bank And Commercial Bank" in easy language so that you can understand it. Before knowing about the difference you should know the definition of Central Bank and Commercial Bank because it will help you in understanding the further topics clearly. 
Both Central Bank and Commercial Bank are important for the economy because both the banks help in the growth of the economy. 

What Is Commercial Bank? 

Commercial Bank is an institution which performs the functions of accepting deposits, granting loans and making investments, with the aim of earning profits. Commercial bank is primary unit of the Indian Banking System. Like other businesses, commercial banks also aim to earn profits and for this, they provide a variety of services to their customers. It acts as financial intermediaries which collect savings from household sector and lend it to the production sector. The main purpose of commercial bank is to provide financial services and loan facility to the general public so that people can fulfill their needs with its help. Some of the functions perfomed by commercial banks are :-
Accepting Deposits
Savings Deposits
Advancing Of Loans
Overdraft Facility
Transfer Of Funds
Locker Facility etc. 
One of the most important functions of commercial banks is Credit Creation. 


Read more :- Difference Between Individual Supply And Market Supply https://theeducationtheory.blogspot.com/2023/11/difference-between-individual-supply.html?m=1

What Is Central Bank? 

Central Bank is an 'Apex' body that controls, operates, regulates and directs the entire banking and monetary structure of the country. It is known as apex (supreme) body as it occupies the top most position in the monetary and banking system of the country. All the financially developed countries have their own Central Bank. 
India's Central Bank is the Reserve Bank Of India (RBI). RBI was established in April 1,  1935 under Reserve Bank of India Act passed in 1934. Central Bank is known by different names in different countries. 
As the Central Bank of the country , The Reserve Bank of India performs the following functions:-
Currency Authority Or Bank Of Issue
Banker To The Government
Banker's Bank And Supervisor
Controller Of Money Supply And Credit

Central Bank VS Commercial Bank

The various points of differences between the Central Bank and Commercial Bank are:-



1. Meaning

Central Bank is an apex body that controls, operates, regulates and directs the entire banking and monetary structure of the country. Whereas Commercial Bank is an institution which performs the functions of accepting deposits, granting loans and making investments with the objective of earning profits. 

2. Status

Central Bank is the apex institution in the money market. Whereas Commercial Bank is merely a unit in the banking structure of the country and operates under the control of central Bank. 

3. Ownership

Central Bank is generally owned and governed by the government. Whereas Commercial Bank can be owned and governed by the government or the private sector. 

4. Objective

Central Bank operates in public interest without profit motive. Whereas Commercial Bank aims to maximise profits. 

5. Issue Of Currency

Central Bank has sole monopoly in issue of currency. Whereas Commercial Bank has no power to issue currency. 

6. Public Dealing

Central Bank does not deal directly with the public. Whereas Commercial Bank deals directly with the public. 

7. Number Of Banks

There is only one Central Bank in a country due to peculiar nature of its activities. For example, RBI in India. Whereas there are a number of Commercial Banks in a country. For example, State Bank of India, Punjab National Bank, etc. in India.