Showing posts with label Banking. Show all posts
Showing posts with label Banking. Show all posts

Disadvantages Of Branch Banking

Banking , Business
Major limitations or disadvantages of branch banking system can be highlighted as follows:

1. Chance Of Mismanagement

Because of large size, various branches, large number of employees and large scale operation there may be a lack of strict supervision, effective communication and proper controlling in branch banking system. So, there is a high chance of mismanagement in this type of banking.

2. Long Decision Making Process

In branch banking system, branch managers have very limited power. They have to consult with the head office to make any decision. So, decision making process is very long as compared to unit banking.

3. No Prompt Action

Prompt action cannot be taken because of delayed decision.

Branch banking requires high operating and overhead expenses because of large size, different branches and large number of employees.

5. Lack Of Initiative

Branches have limited powers and they cannot take decisions independently without consulting the head office. So, this type of banking system may lack initiative.
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Advantages Of Branch Banking

Banking , Business
Major advantages or benefits of branch banking can be studied as follows:

1. Large Size

Branch banks are large in size and they are spread all over the country. So, they gain the benefits of large scale operation.

2. Adequate Capital

Branch banks have much more capital than unit banks. So, they never suffer from the limitations of inadequacy of capital.

3. Less Costly

These banks have effective management, sufficient resources and proper system which reduce the cost of operation.

4. Adequate Deposit And Investment

They can collect huge amount of deposit from the public which leads to greater investment capacity.

5. Increase Public Confidence

Services provided by branch banks are far better than the services of unit banking system. It helps to build public confidence and trust.

6. Risk-Spreading Capacity

In branch banking system, losses of one branch can be recovered by the profit of other branches.
advantages branch banking
7. Employment Opportunity

Branch banks require more human resources to operate in different departments, sections and branches. So, it creates employment opportunity in the country.

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8. Goodwill And Image

Proper and convenience service provided by branch bank helps to maintain goodwill and image of the organization.

9. Efficient Management

Management is very effective and efficient because of specialization, division of labor and highly qualified managers and staffs.
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Disadvantages Of Unit Banking

Banking , Business
Major disadvantages or drawbacks of unit banking system can be highlighted as follows:

1. Lack Of Solvency

Due to small scale operation, it has less capital than branch bank. So, there is a lack of solvency in unit banking.

2. Lack Of Specialization

Unit bank cannot hire skilled, qualified and specialized employee because of limited capital. So, it lacks specialization.
disadvantages unit banking
3. No Division Of Labor

Unit bank cannot practice division of labor in the workplace because of small size and limited capital.

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4. Lack Of Fund Mobility

Unit banking lacks mobility of fund because of limited area and localized operation.

5. Local Pressure

Unit banks have to face local pressure and disturbance. So, it is very difficult of offer banking service in certain locality only.

6. Less Profit

Unit banks have less profit because of the lack of branch, limited area of operation, less deposit and less investment opportunities. 
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Advantages Of Unit Banking

Banking , Business
Major advantages or merits of unit banking system can be highlighted as follows:

1. Efficient Management

In unit banking, all services are offered from a single office. Because of small scale operation, supervision, coordination, coordination and controlling is very easy. So, it can be managed efficiently and effectively than branch banking.

2. Less Irregularities And Fraud

Because of effective supervision and effective controlling system, there is less risk if irregularities and fraud under this banking system.

3. Prompt Decision

Bank manager can make any decision without consulting others. So, prompt decision is possible in unit banking. Quick decision helps to act quickly.

4. Low Overhead Cost

Because of small scale operation and less number of employees, Operational and overhead costs are lower than branch banking system.

5. Less Risk

Unit banking is less riskier than branch banking system because of small amount of capital.

Unit banks collect deposits from local people and utilize for the development of the same area. So, these banks play important role in the development of the society.

7. No Competition

Unit bank is free from competition because it is located at a certain area where other banks do not exist.

8. Direct Customer-Banker Relation

It is easy for the management to establish direct contact and relation with customers and other related parties because of small scale operation.
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Advantages And Disadvantages Of Bank Regulation

Banking ,
Benefits/Merits/ Advantages Of Bank Regulation

Main advantages or benefits of banking regulations are as follows:

1. To Build Confidence

Bank regulation helps to build public confidence and create trust in the banking system of the country.

2. Safety

Banking regulation ensures the safety of public savings in the bank. It is essential to protect public deposit.

3. Credit Control

Credit control is another important advantage of banking regulation. It prevents excess credit creation by controlling loans and investments.

4. Fairness

Bank regulation ensures fairness in financial services to all the customers without discrimination on the basis of race, sex, religion etc. 

5. Implementation Of Policy

It helps to implement government's policy properly to assist the economic policy of the nation.

advantages disadvantages bank regulation

Drawbacks/Demerits/ Disadvantages Of Bank Regulation

Major drawbacks or disadvantages of banking regulation are as follows:

1. Less Profit

Unnecessary control and heavy regulation may restrict banks to perform their tasks freely. So, banks cannot earn adequate profit.

2. Failure

Banking regulation may control unnecessary banking activities but it cannot prevent bank failure.

3. Costly And Time Consuming

Bank regulation is very costly and time consuming process.
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