Distinguish between the following:
Commercial bank & Central bank
ANSWER:
Basis of Difference
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Loan
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Overdraft
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Meaning
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In the case of loan, a certain amount is advanced for a specific purpose and a specific period.
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It is a facility given to a current account holder to withdraw amount more than what he/she has in his/her account.
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Eligibility
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Any account holder can get a loan from a bank.
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Only current account holders can enjoy this facility.
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Rate of interest
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Comparatively low interest rate is charged.
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A high interest rate is charged.
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Duration
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It is meant for a long period.
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It is meant for a short period.
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Amount
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The amount given as a loan is high.
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The amount of an overdraft is comparatively smaller.
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Separate account
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Separate account is required.
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Separate account is not required.
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Basis of Difference
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Commercial Bank
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Central Bank
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Objective
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The main objective of a commercial bank is to make profits.
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The main objective of the central bank is to regulate and control the functioning of other banks.
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Issue of notes
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It cannot issue currency notes and coins.
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It has the exclusive right to issue currency notes and coins.
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Deposits
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It accepts deposits from the general public.
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It does not accept deposits from the general public.
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Public dealings
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It directly deals with the general public.
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It does not directly deal with the general public.
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Ownership
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It can be owned by private players or the Government.
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There is only one central bank in India, i.e., RBI.
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Number
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There are many commercial banks in India.
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There is only one central bank in India, i.e., RBI.
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