What Are National Banks?


Quick Answer

In the United States, national banks are commercial banks chartered by comptrollers of the U.S. Treasury. In other countries, a national bank is simply a central bank controlled by the government.

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Full Answer

National banks play a large part in structuring a country's financial system. In the United States, they are instrumental in managing the auction process of U.S. Treasury bonds because they are members of the Federal Deposit Insurance Corporation. Other duties of national banks in the U.S. are to manage and process transactions with local Federal Reserve banks daily and produce call reports which are handed to the Federal Reserve quarterly. These reports are made public.

National banks in the United States are not subject to state usury laws which are in place to prevent predatory lending, but the rates, fees or terms that they use must be disclosed to the customer. The first national bank in the United States was founded based on plans laid by George Washington. While the Federal Reserve is the United State's central bank, it is not a national bank.

Chile's national bank is BancoEstado. Established in 1953, it is a merge of a few state-owned financial institutions. India's national bank is the National Bank for Agriculture and Rural Development, and it is operated by the Indian government.

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