give two differences b/w a commercial bank and a financial institution?
A Commercial Bank is a financial institution that accepts deposits from the general public and extends loans for various purposes such as consumption and investment. Although it is categorised as a financial institution but all other financial institutions cannot be regarded as commercial banks. Financial institutions such as post office saving banks cannot be categorised as banks. This is because although they do accept deposits but they do not perform the lending functions. Similarly, the financial institutions such as LIC, UTI, etc. cannot be regarded as commercial banks. This is because although they perform lending functions but they do not accept deposits from the general public. For a financial institution to classify as a commercial bank it must perform both the functions- acceptance of deposits and lending functions. Another point of difference between a financial institution and a commercial bank is that a commercial bank can create credit in the economy, whereas other financial institutions can not perform this function.