Skip to content

What is a Commercial Bank?

A commercial bank is a financial institution that provides several financial services. Financial services are varied but fall into the broad categories of deposits, loans and investments. These financial services are offered to the banks’s main customers – individuals, institutions and businesses.

Role of the Commercial Bank

The primary function a commercial bank is to provide financial services to its customers. Services include the granting of loans and mortgages, accepting deposits which can be for savings or fixed deposits and monitoring investment products.

The role of the bank should not be taken lightly because it essentially holds the wealth of the citizens of a country. This makes the bank a resource, which can be depended on for support. In many countries the banking system is supported by the commercial bank and its perceived strength.

As a primary source of financing for private development, banks can have a measurable impact on the economy. For some, the commercial bank plays an important role in the economic development and stability of a country. Banks provide much needed finance and credit and are seen as the “nerve centre” of all commerce and trade.

International Regulation of Commercial Banks

The overall management of banks and their operations are regulated by specific requirements, licenses, guidelines and restrictions. Governmental agencies and some private bodies are tasked with monitoring banks and how business is conducted. The 2008 economic recession was an extraordinary event that underscored the need for supervision and scrutiny.

Bank regulation has several objectives which all work together to ensure that there is transparency in the marketplace. Risk is a constant concern and the challenge is for banks to reduce risks to their customers and shareholders. Regulations also cover the fair treatment of customers and practices that look out for their best interests.

In recent times, regulation has focused on anti-money laundering and financial crimes. There is international pressure for banks to be more vigilant and to discourage relationships with suspicious parties. The Basel Committee on Banking Supervision maintains worldwide banking supervision via a set of reform measures known as BASEL.

Commercial Banks in Barbados

The commercial banks in Barbados are all of foreign ownership. They include First Citizens International Bank, Scotia Bank, CIBC First Caribbean International Bank and the Royal Bank of Canada. These banks provide a number of services that are offered to both individuals and businesses.

Personal services include chequing and savings, mortgages and loans, credit card and debit cards, fixed deposits and investments and insurance. Business services

Are you interested in getting the most from your money? Subscribe to Odd Cents and get a free copy of our checklist: 31 Ways to be the Macgyver of Personal Finance. 

Follow Odd Cents on Instagram for free, actionable personal finance tips.