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)
- 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.
- 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.
- Commercial Banks adopt this (like Currency Converter Bank i.e., Foreign Exchange)
- Branches are allowed to transact the banking business in general.
- 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.
- 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.
Two or more banks are directly or indirectly controlled by an association, trust or corporation. (famous in USA)
- Transfer of fund from one branch to another;
- Economies of large scale operations;
- Maintain its own Board of Directors;
- Availability of Experts Services.
- Corruption; (because of members are if one same organization)
- Lack of efficiency; because control administrative office is generally not in position to enforce code of discipline.