Branch Banking vs Unit Banking

[Edit Comparison Table]

Hide
Branch Banking Unit Banking
All

Proper distribution of capital No proper distribution of

Distribution of Capital: hide
and power. capital and power.

Rate of interest is uniformed Rate of interest is not

and specified by the head uniformed as the bank

Rate of interest: hide
office or based on instructions has own policies and

from RBI. rates.

Deposits and assets are Deposits and assets are

diversified,scattered and nt diversified and are at

Deposits and assets: hide
hence risk is spead at various one place,hence risk is

places. not spread.

More Operational
Operational freedom: Less Operational freedom. hide
freedom.

Loans and advances are Loans and advances can

Loans and advances: based on merit,irrespective of be influenced by hide

the status . authority and power.

Efficient,trained and Less trained skilled and

Staffing: hide
supervised. supervised.

Larger financial resources in Larger financial resources

Financial resources: hide
each branch. in one branch

Delay in Decision-making as Time is saved as

Decision-making: they have to depend on the Decision-making is in the hide

head office. same branch.

Funds: Funds are transferred from Funds are allocated in hide

one branch to one branch and no

another.Underutilisation of support of other

funds by a branch would lead branches.During financial

to regional imbalances crisis,unit bank has to

close down.hence lead to

 Hide
Branch Banking Unit Banking
All

regional imbalances or

no balance growth

Cost of supervision: High Less hide

Proper checks are taken

Exists as improper use of
Mismanagement: up.no misuse of hide
power and authority exist
Mismanagement

Concentration of power in the

Yes No hide
hand of few people:

Specialisation not
Division of labour is possible
possible due to lack of
Specialisation: and hence specialisation hide
trained staff and
possible
knowledge

High competiton with the Less competition within

Competition: hide
branches the bank

Shared by the bank with its Used for the

Locality/Resources/Funds/Profits: hide
branches development of the bank

Specialised knowledge of the local Not possible and hence bad Possible and less risk of

borrowers: debits are high bad debts

Differences in Definition

Unit banking refers to a single bank which renders services and operates without any branches

anywhere. This kind of banking system is common in the USA. Restrictive branching laws encourage

large numbers of small, independently owned state banks, and large multibank holding companies

owning numerous unit banks. Branching laws in most states have been eased in the last several

years, permitting geographic expansion and branch banking .Unit banking operate one full banking

services.

Branch banking center or financial center refers to a single bank which operates through various

branches in a city or in diferent locations or out of the cities. This kind of banking system is common

in India. e.g. State Bank of India. It offers a wide array of face to face service to its

customers.Historically, branches were housed in imposing buildings, often in a neoclassical

architecture style. Today, branches may also take the form of smaller offices within a larger complex,
such as a shopping mall.Services provided by a branch include cash withdrawals and deposits from a

demand account with a bank teller, financial advice through a specialist, safe deposit box rentals,

bureau de change, insurance sales (where it is allowed by law), etc.Other financial institutions reduce

their costs by having no branches and are sometimes known as virtual banks.

unit banking
banking system in several states that prohibits branching, or operation of more than one full-service banking
office. Banks operating in these states, located principally in the Midwest, are sometimes referred to as unit
banks. Restrictive branching laws, most prevalent in the Midwest and the Southwest, encouraged chartering of
large numbers of small, independently owned state banks, and large multibank holding companies owning
numerous unit banks. Branching laws in most states have been eased in the last several years, permitting
geographic expansion and branch banking networks across the United States.
chain banking
control of three or more independently chartered banks by a few individuals, usually through stock ownership or
interlocking directorates. Chain banking differs from branch banking, or multioffice banking within a single
institution and group banking by affiliate banks within a bank holding company. Its importance in the banking
system has declined since the late 1980s with the rapid growth of interstate banking and, in several states,
more liberalized branching laws.
branch banking
multi-office banking, generally defined as accepting deposits or making loans at facilities away from a bank's
home office. Branch banking has gone through significant changes since the 1980s as banks responded to a
more competitive nationwide financial services market.
In the 1990s, regulatory limitations on bank branching, such as the 1920s era mcfadden act that restricted
branching to a bank's home state, were finally lifted. The Riegle-Neal Interstate Banking & Branching Efficiency
Act of 1994 authorized well-capitalized banks to acquire branch offices, or open new ones, anywhere in the
United States outside their home state after June 1, 1997. Most states passed laws enabling interstate
branching prior to that date. Branch banking networks are gradually evolving into multi-state financial services
networks where depositors can access their accounts from any banking office. Financial innovation such as
internet banking will also influence the future of "bricks and mortar" banking by potentially reducing the need to
maintain extensive branch networks to service consumers.
is a local bank operating just as a single branch. An example of a unit bank is a community bank.

Banks in India have traditionally offered mass banking products. Most common deposit products being
Savings Bank, Current Account, Term deposit Account and lending products being Cash Credit and Term
Loans. Due to Reserve Bank of India guidelines, Banks have had little to do besides accepting deposits at
rates fixed by Reserve Bank of India and lend amount arrived by the formula stipulated by Reserve Bank
of India at rates prescribed by the latter. PLR (Prime lending rate) was the benchmark for interest on the
lending products. But PLR itself was, more often than not, dictated by RBI. Further, remittance products
were limited to issuance of Drafts, Telegraphic Transfers, Bankers Cheque and Internal Transfer of
funds. 
In view of several developments in the 1990s, the entire banking products structure has undergone a
major change. As part of the economic reforms, banking industry has been deregulated and made
competitive. New players have added to the competition. IT revolution has made it possible to provide
ease and flexibility in operations to customers. Rapid strides in information technology have, in fact,
redefined the role and structure of banking in India. Further, due to exposure to global trends after
Information explosion led by Internet, customers - both Individuals and Corporates - are now demanding
better services with more products from their banks. Financial market has turned into a buyer's market.
Banks are also changing with time and are trying to become one-stop financial supermarkets. Market
focus is shifting from mass banking products to class banking with introduction of value added and
customised products.

A few foreign & private sector banks have already introduced customised banking products like
Investment Advisory Services, SGL II accounts, Photo-credit cards, Cash Management services,
Investment products and Tax Advisory services. A few banks have gone in to market mutual fund
schemes. Eventually, the Banks plan to market bonds and debentures, when allowed. Insurance peddling
by Banks will be a reality soon. The recent Credit Policy of RBI announced on 27.4.2000 has further
facilitated the entry of banks in this sector. Banks also offer advisory services termed as 'private banking' -
to "high relationship - value" clients.

The bank of the future has to be essentially a marketing organisation that also sells banking products.
New distribution channels are being used; more & more banks are outsourcing services like disbursement
and servicing of consumer loans, Credit card business. Direct Selling Agents (DSAs) of various Banks go
out and sell their products. They make house calls to get the application form filled in properly and also
take your passport-sized photo. Home banking has already become common, where you can order a
draft or cash over phone/internet and have it delivered home. ICICI bank was the first among the new
private banks to launch its net banking service, called Infinity. It allows the user to access account
information over a secure line, request cheque books and stop payment, and even transfer funds
between ICICI Bank accounts. Citibank has been offering net banking to its Suvidha program to
customers.

Products like debit cards, flexi deposits, ATM cards, personal loans including consumer loans, housing
loans and vehicle loans have been introduced by a number of banks. 

Corporates are also deriving benefit from the increased variety of products and competition among the
banks. Certificates of deposit, Commercial papers, Non-convertible Debentures (NCDs) that can be
traded in the secondary market are gaining popularity. Recently, market has also seen major
developments in treasury advisory services. With the introduction of Rupee floating rates for deposits as
well as advances, products like interest rate swaps and forward rate agreements for foreign exchange,
risk management products like forward contract, option contract, currency swap are offered by almost
every authorised dealer bank in the market. The list is growing. 

Public Sector Banks like SBI have also started focusing on this area. SBI plans to open 100 new
branches called Personal Banking Branches (PBB) this year. The PBBs will also market SBI's entire
spectrum of loan products: housing loans, car loans, personal loans, consumer durable loans, education
loans, loans against share, financing against gold.
 

Home >> Technology Products >> Real Time Gross Settlement

Real Time Gross Settlement (On line Funds Transfer to other banks)

What is RTGS? Real Time Gross Settlement System (RTGS) is a funds transfer
mechanism where transfer of money takes place from one bank to
another  on a real time basis. In other words, this is an electronic
payment processing environment wherein transactions are settled
as soon as they are processed.

Who can avail this Only customers of the branch where they are having
facility Savings/Current Accounts

In what way it is Customer can remit funds to the account of another RTGS enabled
beneficial to the bank branch
Customers The funds are transferred instantaneously at nominal charges

Min Amount for Rs.1,00,000

Transfer  

Max Amount for No Limit

Transfer

Charges Not exceeding Rs.25 per transaction for remittance up to Rs.5 lakhs
Not exceeding Rs.50 per transaction for remittance Rs.5 lakhs and
above

What the customer IFSC of the bank branch to which the remittance to be made (IFSC
must have for is 11 characters code)
remittance Beneficiary account number, Name and Address (to whom the
remittance is intended to )
Approach the branch with the above details

 It is available on the cheque leaf supplied by the bank

How to get the  Can also get from the branch

IFSC of the branch

What is the time Instantaneous

frame for reaching
the funds at the
other end

Cut off time for Monday to Friday : 0900 hrs to 1630 hrs
remittance through Saturday            :  0900 hrs to 1330 hrs
RTGS RTGS works on all days except on Sundays and National Holidays

Important - Outward :While remitting the funds, Account Number of the

Account Number beneficiary is to be mentioned correctly in the voucher (to whom
the remittance is intended to ).
Inward : While seeking remittance from other bank Customers it
is mandatory to quote your 15 Digit Finacle Account Number
compulsorily.
 Helpline For further details please contact or your account branch
1.  Andhra Bank, RTGS branch
     8 – F Maker Towers, Cuffee Parade,
     MUMBAI – 400 023
     Phone : 022-22168047
     email: bmmum1250@andhrabank.co.in