types of bank

This post will explain types of bank. An organization that is financial and is accredited for getting funds, managing withdrawals, and making loans is called a bank. Banks can be of numerous types depending on their functions. Here you can get a clear idea of the essential kinds of banks with definitions and descriptions. The names of the various types are as follows:

Types Of Bank With Definitions In 2021

In this article, you can know about types of bank here are the details below;

Retail Banks

You are most likely most knowledgeable about this kind of bank. You may have your cost savings or checking accounts in a retail bank. A retail bank’s focus is on their consumer’s or on the public for making them prospective consumers. You can get loans, charge cards, and debit cards from these banks. These banks have various branches in different places of populated areas. According to Statista world’s third top retail banks was China Construction Bank in February 2017.

Commercial Banks

Company consumers are the focus of the commercial banks. Businesses likewise require savings and examining accounts as the individuals do. But their nature of services is more complex, and quantities of the cash or transaction numbers can be quite larger. They might need to accept client payments, depending heavily on credit lines for managing cash flow, and might utilize letters of credit for working overseas. Commercial banks accept various kinds of deposits such as existing deposits, savings deposits, seasonal deposits, repaired deposits, recurring deposits, etc. Businesses can get several kinds of advances and loans from commercial banks, such as loans, overdrafts, cash credits, and discounting bills. Based on Investopedia, the Industrial and Commercial Bank of China was the top industrial bank in the world in April 2017.

Central Banks

The central banks handle a federal government’s monetary system. Every nation has a reserve bank. For example, The United States has the Federal Reserve Bank as the reserve bank, and Bangladesh has Bangladesh Bank as its central bank. The central banks functions are non-profit in nature. The Central bank is the regulators, controller, and manager of the nation’s commercial banks and other banks’ functions. The central bank functions as a lender to the banks and the federal government, control credit concerns notes and keeps the reserves for gold and forex of the nation.

Investment/ Industrial Banks

Companies operate in the monetary markets with the help of financial investment banks. A company that desires to go public or sell financial obligation securities to investors typically utilizes an investment bank. The industrial bank is anothers name of the investment bank. AB Bank, Agrani Bank, Bangladesh Development, Bank Asia are a few of Bangladesh’s investment/industrial banks. Investment banks accept long-term deposits from the public. Investment banks release debentures and shares to secure capital. Based on Investopedia, Goldman Sachs (GS), headquartered in New York, is the world’s leading financial investment bank in 2019.

Agricultural Banks

Banks offering farming loans to the farmers are the agricultural banks. These banks offer medium-term and long-lasting loans. The federal government develops agricultural banks for promoting agricultural credit or loans in the nation.

Co-operative Bank/ Mutual Bank

The banks typically offering short-term, medium-term, and long-term loans for agricultural purposes are called co-operative banks. Small-scale artisans also get loan’s from co-operative banks. The rate of interest of loans is less expensive in these banks. These banks can be seen boths in rural and city locations. The mutual bank is another name of cooperative banks. Bangladesh Samabaya Bank is the apex cooperative bank in Bangladesh.

Forex Banks

The specialized banks supplying finance for foreign trade are referred to as foreign exchange banks. These banks accept deposits by the public. Generally, these banks have branches in different foreign nations to guarantee their services in a continuous method. However, just recently, commercial banks are performing this tasks too. Bank of America Merrill Lynch is one of the leading foreign exchange banks in the world.

Exchange Banks

Exchange banks fund the country’s imports and exports. These banks generally supply foreign exchange to the consumers and support to develop worldwide trade. They give a discount rate for foreign bills of exchange to the clients too.

Online Banks

The banks which operate entirely online and have no physical branches where the consumers can check out are called online banks. Numerous banks having physical places likewise supply online services like viewing accounts and paying costs online, and so on. However, online banks are different. These banks often give competing rates on savings accounts, and they specifically offer complimentary checking. Ally Bank of the United States has ended up being the top amongst the online-only banks in 2019.

Credit Unions

Credit unions and banks are similar. However, these are customer-owned non-profit companies, whereas banks are primarily investor-owned. Products and services used by credit unions are primarily identical to those of business and retail banks. The members of Cr unions have some common characteristics: their location of living, their working location, their profession, etc.

Private Bankers The people doing banking organizations separately or on a collaboration basis are called private bankers. This sector is simply unorganized. The private bankers mainly don’t accept or receive any deposits from the public. They perform banking business utilizing their own capital. Individuals get loans from them at high rates of interest.

In this way, banks can be categorized based upon their specialized activities. However, nowadays, commercial banks carry out functions of agricultural banks; they are likewise providing financing for organizations and financial investment banks. Commercial banks have even expanded their location of function to forex and hence performing the function of foreign exchange banks. Thus, commercial banks have raised their abilities to bring in more clients.