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 different 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.
Less Operational freedom.
More Operational freedom.
Loans and advances
Loans and advances are based on merit,irrespective of the status .
Loans and advances can be influenced by authority and power.
Larger financial resources in each branch.
Larger financial resources in one branch
Delay in Decision-making as they have to depend on the head office.
Time is saved as Decision-making is in the same branch.
Funds are transferred from one branch to another.Underutilisation of funds by a branch would lead to regional imbalances
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
Cost of supervision
Concentration of power in the hand of few people
Division of labour is possible and hence specialisation possible
Specialisation not possible due to lack of trained staff and knowledge
High competiton with the branches
Less competition within the bank
Shared by the bank with its branches
Used for the development of the bank
Specialised knowledge of the local borrowers
Not possible and hence bad debits are high
Possible and less risk of bad debts
Distribution of Capital
Proper distribution of capital and power.
No proper distribution of capital and power.
Rate of interest
Rate of interest is uniformed and specified by the head office or based on instructions from RBI.
Rate of interest is not uniformed as the bank has own policies and rates.
Deposits and assets
Deposits and assets are diversified,scattered and hence risk is spead at various places.
Deposits and assets are nt diversified and are at one place,hence risk is not spread.