• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Googlesir Logo

Googlesir

  • Home
  • Employee Training
  • Marketing and Sales
  • Investment & Earning
  • Managerial Economics
  • Entrepreneurship and Career

21 Advantages and Disadvantages of Commercial Banks

Last Modified: 13 April, 2020 28 Comments

Commercial Banks are those banks which have been registered under the banking act of specified country. and they        making available short term credit facilities for industries and businesses.

advantages and disadvantages of commercial banks
advantages and disadvantages of commercial banks

There so many different benefits and limitations of taking loans from commercial banks.

Advantages of Commercial Banks

Following are the important advantages of financial assistance provided by commercial banks:

  1. The deposited amount with the banks is used for the overall development of the country through the financial assistance provided by the banks.
  2. Socialism was established in the country with the help of the banks and their nationalization.
  3. Banks help the unorganized and weaker sections. As a result, the loan requirements of small and marginal farmers, artisans, small entrepreneurs, and weaker sections have started getting fulfilled.
  4. The commercial banks have provided financial assistance to the unemployed persons in starting their venture.
  5. By the establishment of regional banks in the rural areas, farmers are coming out of the grip of moneylenders and rural indebtedness has started declining.
  6. The commercial banks are encouraging the development of small and cottage industrial also and loan facilities are being provided to the entrepreneurs.
  7. The economic position of the common man has been rapidly improving due to the significant role of commercial banks in the process of national development. As a result, their living standard is going high.
  8. The entrepreneurs can obtain the loan on easy terms, without many formalities.
  9. Banks maintain the secrecy of all information about their customers.
  10. The bank is a real friend at the time of need because the bank helps the entrepreneurs during the crisis through overdraft facilities and credit facilities.

Related: Trading On Equity: Objectives, Types, Importance, Limitations.

Disadvantages of Commercial Banks

The entrepreneurs and institutions may have the following disadvantages also, from the commercial banks:

  1. The efficiency of the banks is fast reducing.
  2. Customer services are also fast deteriorating. As a result, the customers are getting dissatisfaction also
  3. The branch managers have become weak and helpless due to fast expansion and the majority of local staff. All these adversely affect management and control.
    problems of commercial banks
    Disadvantages of Commercial Banks
  4. The profit earning capacity of banks is also reducing due to the decline in their efficiency.
  5. The significant share of loans provided by the banks is utilized only by the organized sectors of the economy, even today.
  6. No change has taken place in the organizational structure of the banks, even after their fast expansion and new challenges to them.
  7. Good progress has not been achieved in the sphere of recovery of loans by the banks. As a result, the efficient circulation of funds does not become possible.
  8. The cases of fraud and embezzlement of bank funds by the bank officers and staff are also alarmingly increasing.
  9. The deposits of the bank have not increased in the proposition of expansion of branches of the banks. Hence, significant assistance is not being provided to the entrepreneurs.
  10. The political influence in providing loans, especially the concessional loans have adversely affected the recovery of bank loans.

Related: 19 Factors Influencing Entrepreneurship Development.

Types of Financial Assistance by Commercial Banks

Commercial banks provide short term financial assistance, by way of:

  1. Providing, ordinary types of loans.
  2. Providing an overdraft facility.
  3. Giving cash credit.
  4. Making cash payment of bills of exchange.
  5. Purchase of shares and debentures.
  6. Providing a guarantee.
  7. Providing loans against mortgages, etc.

The commercial banks provide long term and short term finance also, in various forms, like:

  1. Making the investment of money in shares and debentures.
  2. By providing loans, against the security of fixed assets.
  3. By the frequent renewal of short term loans.
  4. By underwriting of securities of the companies.
  5. By making investments of money in specific financial institutions.
  6. The Providing loan, against the securities of the companies.

Difficulties of Commercial Banks

Following difficulties are experienced in taking financial assistance from the commercial banks:

  1. Banks provide loans only against the security of stocks and fixed property. For many business organizations, it becomes difficult to take loans, on the security of fixed assets.
  2. Banks do not provide loans against the security of fixed assets in some cases.
  3. Many formalities are to be completed for taking loans from banks, which causes unnecessary delays also.
  4. Delays in getting loans to occur also due to red-tapism in the banks.
  5. Banks keep a high margin in providing loans, due to which very low amount of loan is provided in comparison to the value of the property.
  6. Some bank loan bears very high-interest rates.
  7. In several cases, partiality and nepotism are observed in the sanctioning of loans by the banks.
  8. Whereas banks are very liberal in providing loan facilities to the reputed large business organizations, they do not easily provide loans to small and new units.

Top Commercial Banks in India.

Read More:

  • 15 Advantages and Disadvantages of Public Deposits
  • 13 Main Advantages and Disadvantages of Lease Financing
  • 21 Importance and Role of Entrepreneur
  • 15 Key Features of Effective Management Control System
  • 15 Major Role of Entrepreneur in Economic Development
  • 15 Essential Features of Venture Capital (Explained)
  • 12 Characteristics of Ideal or Optimal Capital Structure
  • 12 Merits & Demerits of Business Process Outsourcing (BPO)
  • 21 Advantages and Disadvantages of Franchising (Explained)

Share Now:

  • Share
  • WhatsApp
  • Tweet

28 Comments

Reader Interactions

Comments

  1. Geteconhelp says

    November 20, 2019 at 4:18 AM

    Commercial banks are the main source of credit for people and businesses which help to boost the economy. But at the same time problem of NPA (Non-Performing Assests) affect the growth adversely.

    Reply
  2. IEC Consultants says

    April 21, 2021 at 3:04 PM

    Nice information, if you want import export License CAll us: 8287843720

    Reply
    • Jennifer theron says

      April 24, 2021 at 3:04 AM

      Thanks for providing your helpful services

      Reply
  3. Shashi says

    May 4, 2022 at 10:40 AM

    pnb zero balance account opening online -online pnb Zero account opening से निम्न प्रकार के खाते खोल सकते हैं — PNB Saving Deposit Schemes … of Opening Online

    Reply
  4. sbi atm application says

    May 17, 2022 at 5:17 PM

    sbi atm application form – sbi atm application

    Reply
  5. udyam registration says

    October 1, 2022 at 3:38 AM

    I am a writer in udyam registration portal, check how i wrote high quality seo content on the website. Also check how the website is organically ranked on google search engine, so the business people can register, and get their udyam certificate for their business under the portal.

    This website udyamregistrationform.com provides udyam registration certificates to small medium business entrepreneurs in India. So apply for a udyam certificate now and avail financial benefits.

    Also check this portal of epfo login portal.

    Reply
  6. udyam registration says

    December 26, 2022 at 5:43 AM

    Your blog is very helpful to us. Thanks for sharing this article. If you are looking to apply for udyam registration . You can go through this portal.

    Reply
  7. ISO Certifier says

    December 26, 2022 at 7:43 AM

    Thanks for sharing this informative content on bank difficulties.

    Reply
    • Jennifer theron says

      December 30, 2022 at 11:45 AM

      join us

      Reply
  8. Gladias Consulting Pvt Ltd says

    December 26, 2022 at 7:45 AM

    A commercial bank is an easy and flexible source of accepting and withdrawing money. Keep sharing, thanks for the detailed information.

    Reply
    • Jennifer theron says

      December 30, 2022 at 11:44 AM

      enjoy

      Reply
  9. ripplez says

    February 10, 2023 at 2:55 PM

    RIPPLEZ Consulting top-notch Virginia’s IT staffing and employment agency which is a leading organization that matches employers to employees. In developed countries, there are multiple private businesses which act as employment agencies and publicly-funded employment offices.

    Reply
  10. function hall in hyderabad says

    February 10, 2023 at 2:57 PM

    Book Open air banquet halls in hyderabad
    Looking for Outdoor Party Venues / Lawns near Hyderabad? Then check out #Ripplez open air banquet halls in hyderabad. We provide top-notch customer service and work with talented catering vendors. For up to 100 guests, an open-air party location would normally cost between INR 50,000 and 5,00,000. The cost fluctuates according to demand and peak days.

    Reply
  11. classified ads says

    February 10, 2023 at 2:58 PM

    Now Post Free Classified Ads in USA . Post Free classified Ads in USA related to business, services, Real Estate, Jobs, Automobiles, Mobiles & Tablets, Electronics, Services, Home Store, Education & Learning, Travels, Business Opportunities, Entertainment, Matrimonial, many more.

    Reply
  12. udyam registration says

    February 20, 2023 at 12:37 PM

    Great article! Your writing style is very engaging and informative, and I really enjoyed reading your insights on this topic. You’ve presented some interesting and thought-provoking arguments that have given me a fresh perspective

    Reply
  13. udyam registration says

    February 23, 2023 at 1:41 PM

    Thanks for sharing this article. If you are looking to apply forudyam registration . . You can go through this portal

    Reply
  14. Yusuf Suhaib says

    March 12, 2023 at 8:50 AM

    Awesome Information!!! Thanks to Admin for sharing this. I visited many pages of your website. Really Blog is Awesome. Thanks. Visit Disease of the Heart .

    Reply
  15. Chandan Kumar says

    April 9, 2023 at 12:04 PM

    zero balance Account open online kaise khole

    Reply
  16. udyam registration says

    April 17, 2023 at 6:10 AM

    Your article has been a great resource for me. I appreciate your effort in providing such detailed information. If you’re looking for assistance with udyam registration, we are here to help.

    Reply
  17. Chandan Kumar says

    April 27, 2023 at 5:04 PM

    SBI Bank Account Number Kaise pata Kare

    Reply
  18. barsha says

    May 22, 2023 at 4:19 AM

    Your article has been a great resource for me. I learn something new and interesting things from this article. I would like to inform you that we provide services regarding udyam registration .

    Reply
  19. udyam certificate says

    July 4, 2023 at 11:22 AM

    Your article is quite useful. Thank you for sharing it. If you’re looking for an udyam registration site, please visit our udyam portal. and by following a few simple procedures, you can get your udyam certificate.

    Reply
  20. Registration Services says

    July 5, 2023 at 5:16 AM

    Enjoyed reading your blog. I am glad I found this blog as it was useful and informative. If you require Udyam Registration Services please visit our websites.

    Reply
  21. udyam portal says

    July 6, 2023 at 12:36 PM

    Your article is quite helpful. Thank you for sharing it and If anyone is interested in udyam registration then you can visit our udyam portal .

    Reply
  22. TAXCARE says

    July 14, 2023 at 4:12 PM

    Your blog is amazing. Thanks for sharing with us. Keep posting. We provide services regarding Income Tax, GST Registration, MSME Registration, ISO Certification, FSSAI Registration.

    Reply
  23. sanjay says

    August 4, 2023 at 5:48 AM

    The experience of reading your blog was enjoyable. I’m happy I came on the blog because it was useful and informative

    Reply
  24. Soniya says

    August 25, 2023 at 5:52 AM

    The experience of reading your blog was enjoyable. I’m happy I came on the blog because it was useful and informative. If you require Udyam Registration Services then apply here.

    Reply
  25. Chandan RESIDENCE says

    September 21, 2023 at 10:43 AM

    SBI Mobile Banking Activate

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

More to See

challenges of doing personal selling

15 Major Challenges of Doing Personal Selling: Explained

objectives of personal selling

16 Main Objectives of Personal Selling: A Comprehensive Guide

importance of personal selling to society

17 Crucial Importance of Personal Selling to Society

benefits of using pricing skimming for business

21 Benefits of Using Price Skimming for Business: Explained

benefits of using loss leader pricing

21 Benefits of Using Loss Leader Pricing for Your Business

benefits of using dynamic pricing for business

21 Benefits of Using Dynamic Pricing for Your Business

benefits of using cost plus pricing strategy

Top 21 Benefits of Using the Cost-Plus Pricing Strategy

E-mail Newsletter

Footer

Search Here

Know Us

  • Home
  • Blogs
  • About US
  • Contact Us
  • Privacy Policy

Goals to Achieve

  • Business Finance
  • Learn Management
  • Business Growth
  • Know Entrepreneurship
  • Run SuperMarket
  • Decision Making

© 2023 Copyright - Googlesir.com