Difference between commercial and cooperative banks¶

Commercial banks are the most common type of financial institutions. They accept deposits and provide security and convenience to their customers. By accepting deposits, they mobilize savings in the economy.In India, private sector banks are regulated by the Reserve Bank of India (RBI) under the Banking Regulation Act, 1949.

Cooperative banks are financial institutions that operate with the primary aim of earning profit. They offer a wide range of banking services to the general public, businesses, and other organizations. These banks are regulated by national banking laws and overseen by financial authorities like the central bank in their respective countries.

Aspect	Commercial Banks	Co-operative Banks
Registration	Registered under Banking Regulation Act, 1949	Registered under the respective Co-operative Societies Act of the state
Function	Accept deposits for lending to industry and commerce	Accept deposits primarily from members for loans to farmers and small businessmen
Capital/Funds	Have access to huge funds	Have access to limited funds
Area of Operation	Operate across the country and may have a foreign presence	Operation is generally limited to a state level
Nationalization	21 Nationalized public sector banks	None are nationalized
Merchant Banking Services	Almost all provide Merchant Banking Services	Do not provide Merchant Banking Services
Mutual Funds	Operate mutual funds (e.g., Canara Bank, Bank of India, SBI)	Do not operate mutual funds
Main Motive	Operate on commercial principles to earn profits	Operate on the principles of service to members and society
Interest %	Provide less interest compared to Co-operative Banks	Provide more interest than commercial banks

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