Unit Banking

also known as Localized Banking

• Single Office Only i.e., Native only.
• No Branches. (Size and operations are small)
• Best suitable for USA (as economy is better there)

Advantage:

• Less chance of mis-management;
• Initiative in banking business: because the management is of local only and they are aware what people need.
• local development;
• No delay in decision making;
• No monopolistic tendencies.

Disadvantages:

• Very Interference of Local People and community in decision making;
• Liability to face crisis (as there are not large institutions);
• Lack of Specialization;
• Undesirable Competition: any management can open this type of bank;
• It is present in good town, semi-large town but not the rural or small town.

Last Word: For India the Branch Banking is good.

Branch Banking

• Commercial Banks adopt this (like Currency Converter Bank i.e., Foreign Exchange)
• Branches are allowed to transact the banking business in general.

Advantages:

• More Facilities;
• Easy Transfer of funds;
• Large Scale Operation;
  • More labor and specialization;
  • Big banks with huge resources and number of branches can create confidence among public.
• Geographic Spread Risks (If money is not in one branch then another branch can help in that case)
• Large Financial Resources;
• Diversification of business and Assets;
• Efficiency in management. (Experienced Officers are there)
• Proper use of capital. (If money is not needed in Branch A it can transfer to branch B or where it is more needed.)
• Contacts with whole country.

Disadvantages:

• Duplication of Banking Facilities;
• Unhealthy Competition;
• Delay in decision making;
• Inefficient Branches; (If one branch is not good then also it continues to operate)
• Lack of Initiative;
• Lack of Personal Contact;
• Inefficient Control over Branches.

Group Banking

Two or more banks are directly or indirectly controlled by an association, trust or corporation. (famous in USA)

Advantages:

• Transfer of fund from one branch to another;
• Economies of large scale operations;
• Maintain its own Board of Directors;
• Availability of Experts Services.

Disadvantages:

• Corruption; (because of members are if one same organization)
• Monopoly;
• Lack of efficiency; because control administrative office is generally not in position to enforce code of discipline.