DIFFERENCE BETWEEN UNIT BANKING & BRANCH BANKING

DIFFERENCE BETWEEN UNIT BANKING & BRANCH BANKING
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1. Operational Freedom
Branch Banking - Less operational freedom
Unit Banking - More Operational freedom

2. Loans and advances
Branch Banking - Loans and advances are based on merit, irrespective of the status
Unit Banking - Loans and advances can be influenced by authority and power

3. Financial Resources
Branch Banking - Larger financial resources in each branch.
Unit Banking - Larger financial resources in one branch

4. Decision-making
Branch Banking - Delay in Decision-making as they have to depend on the head office.
Unit Banking - Time is saved as Decision-making is in the same branch.

5. Funds
Branch Banking - Funds are transferred from one branch to another.Underutilisation of funds by a branch would lead to regional imbalances
Unit Banking - Funds are allocated in one branch and no support of other branches.During financial crisis,unit bank has to close down.hence lead to regional imbalances or no balance growth

6. Cost of Supervision
Branch Banking - High
Unit Banking - Less

7. Concentration of power in the hand of few people
Branch Banking - Yes
Unit Banking - No

8. Specialisation
Branch Banking - Division of labour is possible and hence specialisation possible
Unit Banking - Specialisation not possible due to lack of trained staff and knowledge

9. Competition
Branch Banking - High competition with the branches
Unit Banking - Less competition within the bank

10. Profits
Branch Banking - Shared by the bank with its branches
Unit Banking - Used for the development of the bank

11. Specialised knowledge of the local borrowers
Branch Banking - Not possible and hence bad debits are high
Unit Banking - Possible and less risk of bad debts

12. Distribution of Capital
Branch Banking - Proper distribution of capital and power.
Unit Banking - No proper distribution of capital and power.

13. Rate of Interest
Branch Banking - Rate of interest is uniformed and specified by the head office or based on instructions from RBI.
Unit Banking - Rate of interest is not uniformed as the bank has own policies and rates.

14. Deposits and assets
Branch Banking - Deposits and assets are diversified,scattered and hence risk is spread at various places.
Unit Banking - Deposits and assets are not diversified and are at one place,hence risk is not spread.