8 Difference Between Commercial Bank and Development Bank

1. Purpose: Commercial Bank: Aim at profit making through lending at high interest rate. Development Bank: Aim at achieving social profit by undertaking developmental projects. 2. Raising Of Funds: Commercial Banks: Commercial banks accept deposits from public through different types of accounts. These deposits are repayable on demand. Development Banks: Development banks do not accept deposits like commercial banks. Their main source of funds are borrowing, grants, selling securities etc. 3. Generally commercial banks do not involve themselves in long term loans. A development bank may provides all types of financial assistance (medium as well as long term) to business units. 4. Commercial banks are set up as companies under Company Act whereas development bank are set up under special act passed by Government. 5. Target Clients: Commercial Bank: Individual and business entities Development Bank: Lends the government