A commercial bank is a financial institution that provides a range of financial services to individuals, businesses, and governments. Commercial banks are crucial components of the financial system and play a central role in the economy by facilitating the flow of money, providing a safe place for deposits, and offering various financial products and services. Their activities include both consumer and business banking.

Key features and functions of commercial banks include:

1. **Accepting Deposits:**
– Commercial banks provide a safe place for individuals and businesses to deposit money. Customers can open various types of accounts, such as savings accounts, checking accounts, and certificates of deposit (CDs).

2. **Providing Loans:**
– Commercial banks extend loans to individuals and businesses for various purposes, including home mortgages, auto loans, personal loans, and business loans. The interest charged on loans is a significant source of revenue for banks.

3. **Offering Financial Products:**
– Commercial banks offer a wide range of financial products and services, including credit cards, debit cards, investment products, insurance, and wealth management services.

4. **Facilitating Payments:**
– Commercial banks play a crucial role in facilitating payments and fund transfers. They provide services such as wire transfers, electronic funds transfers (EFT), and online banking to enable customers to move money between accounts and make payments.

5. **Foreign Exchange Services:**
– Many commercial banks offer foreign exchange services, allowing customers to buy and sell foreign currencies for international trade, travel, or investment purposes.

6. **Investment Banking Services:**
– Some commercial banks have separate divisions or subsidiaries that engage in investment banking activities. This may include underwriting securities, facilitating mergers and acquisitions, and providing advisory services to corporations.

7. **Safekeeping of Valuables:**
– Commercial banks may offer safe deposit boxes for customers to store valuable items, documents, and important possessions in a secure environment.

8. **Risk Management:**
– Commercial banks help manage financial risks for individuals and businesses. This includes providing insurance products, derivatives, and other risk management solutions.

9. **Interest Income and Fees:**
– Commercial banks earn revenue primarily through the interest charged on loans and by charging fees for various services, such as account maintenance fees, overdraft fees, and transaction fees.

10. **Regulation:**
– Commercial banks are subject to regulatory oversight by government authorities to ensure their stability, soundness, and compliance with banking regulations. Regulations vary by country.

It’s important to note that commercial banks are distinct from investment banks, which focus more on securities trading, underwriting, and advisory services. Many countries have regulatory frameworks in place to govern the operations of commercial banks and maintain the stability of the financial system.