Difference between Commercial Banks and Merchant Banks

Commercial Banks
Commercial banks are financial institutions that provide a wide range of banking services to individuals, businesses, and corporations. The primary function of commercial banks is to accept deposits from customers and provide loans and credit facilities to borrowers. Some of the services offered by commercial banks are:

1. Accepting deposits: Commercial banks accept deposits from individuals and businesses in the form of current accounts, savings accounts, fixed deposits, and recurring deposits.

2. Providing loans: Commercial banks provide loans and credit facilities to borrowers for various purposes such as personal loans, home loans, car loans, and business loans.

3. Issuing credit cards: Commercial banks issue credit cards to customers for making purchases and paying bills.

4. Providing investment services: Commercial banks offer investment services such as mutual funds, insurance, and pension plans to customers.

Merchant Banks
Merchant banks are financial institutions that provide specialized financial services to corporate clients and high net worth individuals. The primary function of merchant banks is to provide advisory services to clients on corporate finance, mergers and acquisitions, and capital raising. Some of the services offered by merchant banks are:

1. Corporate finance: Merchant banks advise corporate clients on financial restructuring, capital raising, and mergers and acquisitions.

2. Capital raising: Merchant banks help companies raise capital by issuing securities such as equity shares and bonds.

3. Investment banking: Merchant banks provide investment banking services such as underwriting, syndication, and placement of securities.

4. Wealth management: Merchant banks provide wealth management services to high net worth individuals by offering investment advice, portfolio management, and estate planning.

Conclusion
In conclusion, commercial banks provide a wide range of banking services to individuals and businesses, while merchant banks provide specialized financial services to corporate clients and high net worth individuals. While commercial banks focus on deposits and loans, merchant banks focus on corporate finance and capital raising.