There are many commercial bank limitations, like high collateral requirements, limited rural reach, and a focus on short-term loans. Here are the 7 major limitations that commercial banks have:
Commercial banks have strict eligibility criteria, restricting access to loans for many.
Borrowers often need significant assets to secure loans.
They prioritise short-term lending over long-term investments.
Variable interest rates can affect borrowers greatly.
Banks often lack sufficient branches in rural areas.
Banks avoid high-risk ventures, limiting support for innovative startups.
Their lending capacity is bound to deposit inflows. This limits their flexibility during financial crises.
There are more but these are the most significant ones among them.
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Authors Of The Question
What are the Limitations of a Commercial Bank?
CHEBI MIRABEL LINGWANG
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2025-01-22T12:31:45+00:00 2025-01-22T12:31:46+00:00Comment
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