Advantages Of Unit Banking Essay Example for Free

Advantages Of building block Banking Essay1.local anesthetic DevelopmentUnit relying is localized banking. The unit bank has the specialised knowledge of the local problems and serves the requirements of the local mess in a better manner than branch banking. The funds of the locality are utilised for the local development and are not transferred to other areas 2.Promotes regional BalanceUnder unit banking system, there is no transfer of resources from rural and backward areas to the big industrial commercial centres. This tends to reduce regional in balance. 3.Easy steeringThe management and supervision of a unit bank is much easier and more effective than that chthonic branch banking system. There are less chances of fraud and irregularities in the financial management of the unit banks. 4.Initiative in Banking BusinessUnit banks have full knowledge of and greater involvement in the local problems. They are in a position to take initiative to tackle these problems through financial help.5.No Monopolistic TendenciesUnit banks are generally of small size. Thus, there is no chess opening of generating monopolistic tendencies under unit banking system. 6.No Inefficient BranchesUnder unit banking system, weak and inefficient branches are automatically eliminated. No protection is provided to such banks. 7.No diseconomies of Large crustal plate OperationsUnit banking is free from the diseconomies and problems of large-scale operations which are generally experienced by the branch banks. 8.Easy Management and ControlUnder unit banking system, it becomes really easy for a single office to manage and control efficiently.9.Close Management and Workers RelationshipUnder unit banking system, there prevails a close and cordial kind between employer and employees. 10.Quick DecisionThe owners or the management of unit banks can take quick decision and prompt action in times of emergencies. 11.Use of Local ResourcesLocal financial resources are used for local de velopment. 12.Lesser Fraud and IrregularitiesDue to the less scattered affairs of the bank, there are very little possibilities of fraud and irregularities.Disadvantages Of Unit Banking1.No. Distribution of RisksUnder unit banking, the bank operations are highly localised. Therefore, there is little possibility of distribution and diversification of risks in various areas and industries. 2.Inability to nerve CrisisLimited resources of the unit banks also restrict their abilityto face financial crisis. These banks are not in a position to stand a abrupt rush of withdrawals. 3.No Banking Development in Backward AreasUnit banks, because of their limits resources, cannot afford to open uneconomic banking business is smaller towns and rural area. As such, these area remain unbanked. 4.Lack of long suitUnit banks, because of their small size, are not able to introduce, and get advantages of, division of labor and specialization. Such banks cannot afford to employ highly trained and spe cialized staff.5.Costly remit of FundsA unit bank has no branches at other place. As a result, it has to depend upon the correspondent banks for transfer of funds which is very expensive. 6.Disparity in Interest RatesSince easy and cheap movement of does not exist under the unit banking system, interest rates vary considerably at incompatible places. 7.Local PressuresSince unit banks are highly localised in their business, local pressures and interferences generally disrupt their normal functioning. 8.Undesirable CompetitionUnit banks are independently run by different managements. This results in undesirable competition among different unit banks.9.Limited Size of OperationUnit bank business can not be operated on large scale because of its limited area. Being the small organisation, division of labour can not be applied. 10.No Economy of ReservesUnder unit banking, bank can not transfer its funds to any other branch. So economy in cash reserve can not be secured under this syste m. 11.Limited Financial ResourcesA unit bank has limited financial resources so it is not able to provide full and adequate banking facilities to the industry and trade of the area. 12.Investment of slog FundsA unit bank having no other branches, can not utilize its idle funds in profitable ways.