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Tuesday, September 22, 2020

Difference between Commercial Bank and Development Bank | Meaning and Difference | List 2020 - 21

Difference between Commercial Bank and Development Bank Comprehensive Overview

Origin of the Word “Bank”

The word Bank has been originated from many words. There is no single word or answer to this origin of the word ‘Bank’. According to some economists, the word ‘Bank’ has been originated from the German word ‘Banck’ which means heap or mound or joint stock fund. From this, the Italian word ‘Banco’ has been derived. It means heap of money. But according to this group, the word bank is derived from the Greek word ‘Banque’ which mean a ‘bench’. It refers to a place where money-lenders and money changers used to sit and display their coins and transact business. Thus the origin of the word ‘Bank’ can be traced as follows:

Banck ->Banco ->Banque ->Bank

Table of Contents

1. Origin of the Word “Bank”

2. Bank / Commercial Bank Meaning

3. What is Development Bank?

4. Difference between Commercial Banks and Development Banks

5. List of Top Commercial Banks and Development Banks in India in 2020 - 21

6. List of Top Commercial Banks and Development Banks in USA in 2020 - 21

7. List of Top Commercial Banks and Development Banks in Great Britain (London) in 2020 - 21

Bank / Commercial Bank Meaning:

The Word ‘Bank is used to denote ‘Commercial Banks’ only. A Commercial bank is a financial institution which deals in money and credit. The commercial banks accept deposits from those who have surplus money and give the same to those who are in need of money. As financial intermediaries, a bank acts as a connecting link between borrowers and lenders of money. When banks accept deposits its liabilities increase and it becomes a debtor, but when it makes advances its assets increases and it becomes a creditor.

Definitions of Banks / Commercial Banks

Various definitions of bank and banking have been given by various writers. Some of them are listed below:

Crowther defines a bank as, "one that collects money from those who have it to spare or who are saving it out of their income and lends the money so collected to those who require it".

In the words of Professor Sayers, “Commercial banks are institutions, whose debts- usually referred to as bank deposits are commonly accepted in final settlement of other people’s debt”.

According to Prof. Kinley, “A bank is an establishment which makes to individuals such advances of money as may be required and safely made, and to which individuals entrust money when it required by them for use”.

The above definitions of bank reveal that bank is a Business institution which deals in money and use of money. We can say that any person, institution, company or enterprise can be a bank. The business of a bank consists of acceptance of deposits, withdrawals of deposits, Making loans and advances, investments on account of which credit is exacted by banks.

What are Development Banks?

Development bank is a specialised financial institution which provides medium and long term finance to business units in the forms of loans, underwriting, investments and guarantees operations, promote entrepreneurship and upgrade knowhow and do-how. It is a multi-purpose financial institution and not just a term-lending institution. It does not accept deposits from the public, unlike commercial banks. A development bank does not perform ordinary banking functions.

According to William Diamond, “A Development Bank has the opportunity to promote enterprises i.e. to conceive investment proposal and to stimulate others to persue them or itself to carry them through from the ‘conception’ to ‘realisation’.

Differences between Commercial Bank and Development Bank

Tabular Format


Commercial Bank

Development Bank

1. Formation

Commercial banks are generally set up as companies under the Companies Act’2013.

Development banks are usually set up under the special Act passed by the Government.

2. Nature

Commercial banks are ordinary financial institution.

Development banks are specialised multi - purpose institutions.

3. Raising of Funds

Commercial banks accept deposits from the public through different types of accounts. These deposits are repayable on demand.

Development banks do not accept deposits like commercial banks. Their main sources of funds are borrowing, grants, selling securities etc.

4.Cheque facility

There is cheque facility in case of commercial banks. Demand deposits are withdrawn by cheques.

There is so such cheque facility in case of development banks.

5. Advance

Commercial banks mainly provide short and medium term loans.

Development banks provide medium and long-term loans.

6. Motive

The basic motives of commercial banks are to maximise the profits.

Development banks are motivated by social profit i.e. it aims at providing service.

7. Credit creation

Commercial banks can create credit or multiple deposits while lending. 

Development banks can’t create credit.

8. Acceptance of liabilities 

The commercial bank’s liabilities are   accepted as means to settle transactions.

The liabilities of development banks are not accepted as a means to settle transaction.

List of Top Commercial Banks and Development Banks in India in 2020 – 21

Commercial Banks

Development Banks

1. State Bank of India

2. HDFC Bank Ltd

3. ICICI Bank Ltd

4. Central Bank of India

5. Union Bank of India

6. United Bank of India

7. Axis Bank Ltd.

8. Bandhan Bank Ltd.

9. Indian Overseas Bank

10. IDBI Ltd.

11. Oriental Bank of Commerce

12. IndusInd Bank Ltd.

13. UCO Bank

14. Punjab National Bank

15. Yes Bank Ltd.

1. NABARD (National Bank of Agriculture and Rural  Development)

2. NHB (National Housing Bank)

3. EXIM (Export Import Bank of India)

4. ICICI (Industrial Credit and Investment Corporation of India)

5. IDBI (Industrial Development Bank of India)

6. EXIM (Export-Import Development Banks)

7. SIDBI (Small Industries Development Bank of India)

8. IFCI (Industrial Finance Corporation of India)

9. SIDCs (State Industrial Development Corporations)

10. SFCs (State Financial Corporations)

11. IDFC (Infrastructure Development Finance Company)

12. IIBI (Industrial Investment Bank of India

List of Top Commercial Banks and Development Banks in USA in 2020 – 21

Commercial Banks

Development Banks

1. JPMorgan Chase

2. Bank of America

3. Citigroup

4. Goldman Sachs

5. Morgan Stanley

6. The Bank of New York Mellon

7. PNC Financial Services

8. Capital One

9. HSBC Bank USA

10. UBS

1. IDB (International Development Bank)

2. CABEI (Central American Bank for Economic Integration)

3. Inter America Development Bank

4. World Bank

5. World Bank Group (IFC, IDA, MIGA, ICSID)

List of Top Commercial Banks and Development Banks in Great Britain (London) in 2020 – 21

Commercial Banks and Development Banks


2. Llyods Banking Group

3. NatWest Group

4. Royal Bank of Scotland

5. Barclays

6. Standard Chartered

7. Santander UK

8. Nationawide Building Society

9. Allica Bank

10. Bank of London and Middle East PLC

11. Yorkshire Bank

12. Wesleyan Bank Ltd

13.Weatherbys Bank Ltd

14. Schroders

15. Close Brothers


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