Introduction
Commercial and development banks have provided substantial assistance to people in society for them to maintain a better standard of living. For the general public, this might mean taking a house, education loans, safeguarding assets, making fixed deposits, and many other such services offered. These banks, despite appearing similar in their names, have different functions in society in terms of the candidates they choose, the fields they support, and the environment. Also, employees in both these banks differ from one another in terms of skills, qualifications, and competition required.
The developmental banks that may be owned by the government or non-profit organizations have non-commercial goals and work for the country’s economic development as a whole. And developmental banks provide services to both the public and private sectors of society, whereas commercial banks have more commercial goals and primarily work with the public sector. The developmental bank offers high-risk capital, guarantee, and short and long-term financing for investors. Ultimately these banks have a holistic goal to increase the economy of the country. On the other hand, Commercial banks support individualized interests and motives and provide a helping hand in the critical times of their life that they can replay later within a timeline. Different service offered by the banks also comes with a fixed set of procedures and records that must be presented before the actual sanction of the plan.
Commercial Banks vs. Development Banks
Usually, personal or individual interests are promoted by commercial banks, which often include people from the general public. On the other hand, a candidate for a developmental bank is highly selected from a handful of people. And, is usually a business or trade owner who wants to succeed in his marketing and sales opportunities.
The latter usually offer services to large investors and traders who require special financial support to cope with the competition in their environment. This may be essential in the case of newly formed or established companies. They could receive instant support and fair consequences of interest later. This might not be a problem if the initial investments provided by the banks could help the businesses achieve their necessary goals and targets. Also, enabling an early establishment and raising profit margins.
Developmental banks provide high-risk capital, guarantees, and long- and short-term financing to businesses. It is a special institution aimed at holistic economic development by influencing every sector separately. Hence, the services of these banks extend to both public and private sections of society.
Difference between commercial and developmental banks in tabular form
| Main parameters of comparison | Commercial Bank | Developmental Bank |
| 1. Definition | A firm that holds a general license to provide the public with loans, and money aid at a fair and pre-set interest rate that they can use to fulfill various needs and interests. | This bank offers support to the newly budding firms and company investors that have just begun establishing themselves in the competitive environment. And has more of a holistic goal for the country’s economic development as its aim. These banks offer services to both the public and private sectors at the same time. |
| 2. Services |
Provides with education, housing loans, and safeguard assets can deposit money for a fixed timeline that can be received back at fair interest rates.
Deposit money is accepted in these banks, which is not the case in developmental banks. | Provides services that enable massive transactions and investments possible between the clients. Especially has a goal of aiding with risk capital for economic development projects. Also, financial aid and other support that may be required to establish the company in the new field could also be gained from these banks. |
| 3. Who is benefited? | Often, the general public and community benefit even though it supports personal interests also. | Usually, small budding traders and businessmen are benefitted from these services offered. Also corporates and large investors usually opt for services from a developmental bank. |
| 4. Difference in functions. | Benefiting the general public by aiding in personal interests or needs in their difficult times especially. | Benefit recent companies and businesses to get established in the competitive world. Also, help in raising their standards and profit margins in the field. Thereby focusing on the country’s economic prosperity as a whole. |
| 5. Employee requirements | Anyone who has completed primary eligibility in mathematics, business, economics, or commerce could join this firm easily as an initial career. | However, in developmental banks usually, high skilled analysts with minimum MBA qualifications are taken as employees here. |
| 6. Goals | Community-based goal even though benefiting individual interests separately. | Usually corporate or financial aid goals for large investors and prospering of businesses. Providing finance to the public sector. Funding is made on a non-commercial basis. |
| 7. Advantages | The advantage is calm and peaceful working conditions also involve greater public interaction. These loans can be used to offer some aid to the community in their difficult times. | High pay and extra work go hand in hand in with these employees. Also, these banks have a direct impact on the country’s economy as a whole. |
| 8. Disadvantages | Usually less paid in comparison to developmental bank employees. | Require minimal qualification and is usually involving a competitive skill environment. |
| 9. Ownership | Commercial | Owned usually by the government or non-profit organizations. |
What is a commercial bank?
Commercial banks are what usually come to our mind when we think about "banks". It is a firm that holds a license to lend different services to its clients and lend support to sustain a livelihood. This can mean the provision of loans for various needs, making fixed deposits or FDs, securing several assets in safe hands, and other services.
The important difference between commercial and developmental banks is that commercial banks also accept deposits from people, whereas developmental banks do not lend for this service. Also, these banks work in close association with the private sector only. They often work with a larger section of society, including the general public and businessmen.
However, there is an ordered set of official procedures that must get processed before you get the money in your hands. You might be asked to present official documents that state your financial instability. You may also need to present a record that proves your interest in this loan that you lend. This could be a fee structure or admission letter of the student in case of an educational loan.
Hence, it must require some time and effort from the client until he has the money. He is indebted to the bank and is obliged to follow all timelines and conditions applied including the interest rates, and the year by which he must finish his debt to the bank.
The employees in a commercial bank include branch managers, technicians, trusted officers, sales associates, etc. These employees are offered a decent salary at the same time with normal standard working hours only. Also, commercial banks have greater interaction with the general public and work with people for their support. So, if you want a balanced life and work system, you should probably work in a commercial bank.
What is a development bank?
A development bank usually offers its services to large corporates or institutional investors. It is usually used by the government in financing public and private sector projects that can have a huge impact on the country’s economy as a whole. It provides investors and companies with high-risk capital, guarantees, and financial aid for long and short-term timelines. However, these banks do not accept deposits from people, unlike those of commercial banks.
These types of banks include multilateral or bilateral developmental banks, community developmental banks, national developmental banks, etc. These bank employees are usually high-level analysts that require extra hands in the competitive system to meet their target goals with the clients.
It is not, without a doubt, a career that is often compensated with large salaries. The candidates and employees this bank demands are more than baseline or average, and some general standards need to be considered while opting even for the clients. This involves a more competitive setting and a hugely rewarding career for its employees.
These banks often provide funds for large-scale business projects and money exchanges. The employees of an investment bank include consultants, banking analysts, trading specialists, and capital market analysts. And, are frequently required to have high skills and educational requirements
Differences between commercial and developmental banks in points
Definition
Commercial banks are owned by and often play an important role in lending money to the public for various needs and purposes, with some timelines, interests, and conditions applied to pay it back. On the other hand, developmental banks do more than just lend money; they have more of a holistic goal of raising the standards of the country’s economy through the financial support they give.
Who will be benefitted?
Commercial banks benefit from personal interests and needs at their difficult times and are usually more individualized or general public goals only.
On the other hand, a developmental bank supports investors and huge business partners (both public and private sector benefitted) in their budding companies or firms to support them in their competitive system by offering various financial support options (long and short term), thereby foreseeing a possible impact on the country’s economy.
Functions and services offered by the banks
Commercial banks provide the ability to make fixed deposits, take loans for a variety of interests and needs, safeguard their assets, and a variety of other services to the public and society.
Whereas, the developmental banks' functions are to support large investors in their transactions and provide the large money exchange or financial support they require. They provide long and short-term financing to different business units. Also, along with high-risk capital, guarantees, and
Goals
To assist the general public in maintaining a decent standard of living and promoting potential advancement in their career, employment, or other personal interests. It has greater interaction with the general public. These banks support people in various aspects of their lives. People can also make deposits to the bank.
Whereas, developmental banks at the same time provide the economic development goals for the country. It provides investors with high-risk capital, guarantees, and financial aid. Also, unlike commercial banks, these banks do not accept deposits.
Employee requirements
An undergraduate in mathematics, commerce, economics, business, or finance may be sufficient criteria to get into one of the nearby banks as an initial career.
On the other hand, developmental banks demand better skills and educational qualifications for the job and may also require you to work for extended hours. It usually involves a competitive setting, so demands are also high.
Advantages
The employees of a commercial bank work with these people. These banks benefit the private sector of society. Commercial bank employees are also guaranteed a decent salary and peaceful working hours.
Employees of development banks received higher pay scales than employees of commercial banks. The development bank’s aid benefits the community’s economy and development as a whole. Hence, its services extend to both the public and private sectors of society.
Disadvantages
It may be difficult to compete in a career because it requires more competition, skills, and qualifications. Bank procedures may be time-consuming, as it requires proper verified details and records stating the motive behind this loan and his financial incapacity.
Conclusion
Although both commercial and developmental banks may appear similar in their names, they have different functions, candidates, and goals in a society. Also, the employee demand is different in a commercial bank compared to developmental banks. Many job opportunities are possible in a commercial bank, including bank branch managers, technicians, trust officers, sales associates, etc. And the salary differs based on their position. However, employees in commercial banks work only standard working hours in comparison to those in developmental banks that may require extra handwork and working hours.
Commercial banks offer developmental support to private individuals for their interests and needs and mostly cover only the public sector. On the other hand, developmental banks offer help to prosper small businesses and trade that may be just budding in the competitive system to impact the country's economy and development. And hence, also finance for developmental projects only. However, the services extend to both the public and private sectors.
