Commercial Banks are financial institutions accepting deposits and providing loans, creating credit and expanding money supply. Functions: Accepting deposits (savings, current, term deposits), Lending (to businesses, individuals, mortgages), Providing payments system (checks, transfers, debit cards), Offering financial services (safe deposits, investment advisory). Types of deposits: Demand deposits (withdrawable on demand, zero interest typically), Time deposits (interest-paying, withdrawal restrictions), Savings deposits (moderate liquidity, interest paid). Loan categories: Short-term working capital (business operations), Medium-term (equipment purchase), Long-term mortgages (real estate), Personal loans, Trade credit. Balance sheet items: Assets (loans, investments, reserves), Liabilities (deposits), Equity (capital). Reserve requirements: CRR (Cash Reserve Ratio), SLR (Statutory Liquidity Ratio) in India; mandatory reserves restrict lending capacity. Credit creation: When bank receives deposit, lends portion (keeping required reserves), creates new deposits as loans are credited—multiplied through system. Profitability: Interest spread (lending rate minus deposit rate), Fees and commissions. Regulation: RBI oversight, prudential norms, licensing requirements. Indian banks: State Bank, Private banks (ICICI, HDFC), Foreign banks. ICAI focus: Functions, credit creation mechanism, reserve requirements. Exam tip: "Banks don't just lend deposits; they create credit through lending"—fundamental misunderstanding to avoid.