Tuesday, February 12, 2019

Difference Between Commercial Bank And Merchant Bank

Difference Between Commercial Bank And Merchant Bank

The major dissimilarities or difference between commercial bank and merchant bank can be pointed out as follows:

1. Introduction

Commercial Bank: A financial institution that provides various banking services to the individuals and firms such as collection of deposit, providing debit and credit cards, granting loans etc.
Merchant Bank: Financial institution that deals with international trade and serves large business firms as a financial consultant.

2. Useful For

Commercial Bank: It is useful for individuals and small business firms
Merchant Bank: It is useful for large corporate firms engaged in international trade.

3. Risk Involved

Commercial Bank: It is less riskier than merchant bank
Merchant Bank: It involves higher degree of risk than commercial bank

4. Governed By

Commercial Bank: It is governed by the Banking Act.
Merchant Bank: It is governed and regulated by SEBL

 
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5. Services Offered

Commercial Bank: Collecting deposits, advancing of loan, payment of check, providing remittance service, foreign currency exchange etc. 
Merchant Bank: Underwriting, loan syndication, trade financing, portfolio management etc.
difference-between-commercial-bank-merchant-bank


6. What Is It?

Commercial Bank: It is a retail banking
Merchant Bank: Professional service which include consultancy and financing services.

Commercial Bank Vs Merchant Bank (Comparison Chart)

Basis For Difference

Commercial Bank
Merchant Bank
Introduction

Financial institution that provides services like accepting deposit, granting loans etc to the account holders.
Financial institution which concerned with international trade and serves as financial consultant
Useful For

Individual and small business forms
Large corporate firms
Risk Involved

Less
High
Governed By

Banking Act
SEBL
Services

Collecting deposit, loan advancement, remittance service etc.
Loan syndication, underwriting, trade financing etc.
It Is 

Retail banking
Professional service

I hope this post is helpful to understand the difference between commercial bank and merchant bank and to make comparison between them.