Advantages Of Unit Banking

1.Local Development:Unit banking is localized banking. The unit bank has the specialised data of the local problems and serves the requirements of the local folks in a greater manner than department banking. The funds of the locality are utilised for the native development and aren’t transferred to different areas 2.Promotes Regional Balance:Under unit banking system, there is no transfer of assets from rural and backward areas to the large industrial business centres. This tends to scale back regional in stability.

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three.Easy Management:The management and supervision of a unit financial institution is much easier and simpler than that under branch banking system. There are much less probabilities of fraud and irregularities within the monetary management of the unit banks. four.Initiative in Banking Business:Unit banks have full knowledge of and greater involvement in the native issues. They are ready to take initiative to deal with these problems through financial help.

5.No Monopolistic Tendencies:Unit banks are generally of small dimension.

Thus, there is no chance of generating monopolistic tendencies under unit banking system. 6.No Inefficient Branches:Under unit banking system, weak and inefficient branches are routinely eradicated. No safety is offered to such banks. 7.No diseconomies of Large Scale Operations:Unit banking is free from the diseconomies and issues of large-scale operations that are typically skilled by the branch banks. eight.Easy Management and Control:Under unit banking system, it turns into very easy for a single workplace to handle and management efficiently.

9.Close Management and Workers Relationship:Under unit banking system, there prevails a detailed and cordial relationship between employer and staff.

10.Quick Decision:The owners or the management of unit banks can take fast choice and immediate motion in instances of emergencies. 11.Use of Local Resources:Local financial sources are used for native growth. 12.Lesser Fraud and Irregularities:Due to the much less scattered affairs of the financial institution, there are very little potentialities of fraud and irregularities.

Disadvantages Of Unit Banking:

1.No. Distribution of Risks:Under unit banking, the bank operations are highly localised. Therefore, there is little risk of distribution and diversification of dangers in various areas and industries. 2.Inability to Face Crisis:Limited resources of the unit banks also prohibit their ability to face monetary crisis. These banks are not ready to face a sudden rush of withdrawals. three.No Banking Development in Backward Areas:Unit banks, because of their limits assets, can’t afford to open uneconomic banking business is smaller towns and rural area. As such, these space remain unbanked. four.Lack of Specialization:Unit banks, because of their small size, usually are not in a place to introduce, and get advantages of, division of labor and specialization. Such banks can not afford to employ extremely skilled and specialised employees.

5.Costly Remittance of Funds:A unit bank has no branches at other place. As a end result, it has to depend on the correspondent banks for switch of funds which is very expensive. 6.Disparity in Interest Rates:Since easy and low-cost movement of does not exist underneath the unit banking system, rates of interest differ considerably at completely different places. 7.Local Pressures:Since unit banks are extremely localised of their enterprise, native pressures and interferences generally disrupt their normal functioning. 8.Undesirable Competition:Unit banks are independently run by different managements. This leads to undesirable competitors among different unit banks.

9.Limited Size of Operation:Unit bank enterprise can not be operated on large scale because of its restricted area. Being the small organisation, division of labour can not be utilized. 10.No Economy of Reserves:Under unit banking, financial institution can not transfer its funds to any other department. So economic system in money reserve can not be secured beneath this system. 11.Limited Financial Resources:A unit financial institution has restricted financial sources so it is not capable of present full and adequate banking facilities to the industry and trade of the area. 12.Investment of Idle Funds:A unit financial institution having no other branches, can’t utilize its idle funds in worthwhile methods.