A 

commercial bank (or business bank) is a type of financial institution and intermediary. It is

a bank that provides transactional, savings, and money market accounts and that accepts time deposits.[1]

After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in
banking activities, whereas investment banks were limited to capital market activities. As the two no
longer have to be under separate ownership under U.S. law, some use the term "commercial bank" to
refer to a bank or a division of a bank primarily dealing with deposits and loans from corporations or large
businesses. In some other jurisdictions, the strict separation of investment and commercial banking never
applied. Commercial banking may also be seen as distinct from retail banking, which involves the
provision of financial services direct to consumers. Many banks offer both commercial and retail banking
services.

Complexities

1.      Absence of proper records: It becomes difficult to ascertain the total indebtness of some farmers
because of the absence of proper records of land rights, which creates problem of over financing or
problem of recovery.

2.      Difficulty in verifying actual utilisation of loans: There is often misuse of funds in case of medium
term loans. This creates difficulty in verifying the actual utilisation of funds. For e.g. in case of pump
sets the dealer would sell an old set instead of new one for which bank would sanction him the loan.
Farmer would get additional cash to serve his short- term needs.

3.      Difficulty in judging the creditworthiness: Due to lack of intimate knowledge of the character of the
borrower it is difficult to judge their creditworthiness.

4.      Lack of sufficient supervision: There is no sufficient supervisory staff in the bank as a result there is
misuse of loans, which plugs in loopholes.

5. Large number of offerings - The financial services market now comprises a vast array of product
offerings, instruments and/or services, which shows every intention of increasing. These new
product offerings include derivatives contracts, which now go far beyond covering traditional risk
classes of interest and exchange rates, and equity and commodity prices. Derivatives are
attractive to investors to hedge their risks deriving from real estate, macroeconomic data
releases, credit and even the weather.
1. Increases to costs of support - When banks increase their numbers of product offerings, they also
increase the cost to support those products. These costs include everything from staffing to office
supplies, equipment, training, promotion and publicity - above and beyond the cost of the products
themselves.
2. Complexities of mortgages and loan modification programs - Of particular concern in light of the
decline of housing prices, mortgages and loan modification programs are likely to become even
more complex in the banking market with forecasts of more foreclosures and delinquencies. A report
by Credit Suisse estimates that by the end of 2012 about 8.1 million households will be in
foreclosure - or about 16 percent of the total households holding mortgages.
3. Proliferation of nontraditional intermediation - These include the activities of venture capital firms,
hedge funds, prime brokers, private equity funds, and central clearing banks. Innovative means of
securitizing cash flows is another activity in this category. Such proliferation allows access to new
financing sources as well as the benefits of new financial products to many more borrowers and
investors.
4. Acceleration of global banking markets - As the world shrinks, the acceleration of the banking
market continues unabated. According to some predictions, notably that of Price Waterhouse
Coopers in their report "Banking in 2050," the so-called emerging banking market, comprised of E7
countries, stands poised, to overtake the G7 markets by 2040. Chief among them is China, with its
huge population and changes in education and investment markets.
5. Acceleration of integration of banking markets - Taking into account the increase in net capital
flows from trading partners and the opposite, the increasing current account deficit (seen over the
past several years), the acceleration of banking markets globally adds to the complexity of the
financial market.
6. Demand for U.S. assets by trading partners - Countries want U.S. assets, led by China's high
savings rates and those of other emerging countries. These entities also seek to build a hard
currency cushion against a repeat of the 1997 Asian financial crisis.
7. Changes to benchmarks - Financial crises have led to changes in benchmarks, particularly those
with respect to risk pricing. These include default spreads, term spreads, and implied market swings.
8. Banking market regulatory policy - Experts recommend reliance on market discipline to
encourage sound risk management practices. The challenge for regulators is to design structures
that encourage market discipline and efficiency.
9. Emergence of long-run issues and short-term policy changes - No one holds a crystal ball with
respect to what the future will bring. However, it can be argued that banking market complexities
include the emergence of yet-unidentified long-run issues and short-term policy changes, each of
which can change the landscape of the financial market.