Advantages Of Unit Banking Essay

1.Local DevelopmentUnit banking is localized banking. The building block bank has the specialised intimacy of the local problems and serves the requirements of the local people in a better manner than branch banking. The funds of the neck of the woods be utilised for the local development and are non transferred to different areas 2.Promotes Regional Balance infra unit banking system, there is no transfer of resources from rural and backward areas to the big industrial commercial centres. This tends to scale down regional in balance. 3.Easy ManagementThe management and supervision of a unit bank is much easier and more effective than that to a lower place branch banking system. There are less chances of fraud and irregularities in the pecuniary 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 coiffure to maintain initiative to tackle these problems through financia l help.5.No Monopolistic TendenciesUnit banks are more often than not of scurvy size. Thus, there is no possibility of generating monopolistic tendencies under unit banking system. 6.No Inefficient BranchesUnder unit banking system, weak and inefficient branches are automatically eliminated. No security department is provided to such banks. 7.No diseconomies of Large Scale 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 genuinely 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 relationship between employer and employees. 10.Quick DecisionThe owners or the management of unit banks usher out take quick decision and prompt action in times of emergencies. 11.Use of Local ResourcesLocal financial resources are used for local development. 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 super localised. Therefore, there is little possibility of distribution and diversification of risks in various areas and industries. 2.Inability to Face CrisisLimited resources of the unit banks also restrict their abilityto face financial crisis. These banks are not in a position to stand a sudden rush of withdrawals. 3.No Banking Development in Backward AreasUnit banks, because of their limits resources, heapnot afford to inconsiderate uneconomic banking business is smaller towns and rural area. As such, these area remain unbanked. 4.Lack of SpecializationUnit banks, because of their small size, are not able to introduce, and get advantages of, division of labor and specialization. Such banks cannot affor d to employ highly trained and specialized staff.5.Costly Remittance 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 rateSince easy and cheap movement of does not exist under the unit banking system, interest rates neuter considerably at different 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 force back 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 re serve can not be secured under this system. 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 Idle FundsA unit bank having no other branches, can not utilize its idle funds in profitable ways.