BRANCH

BANKING
S . I N D H U M AT H I
DEFINITION
• Branch Bank is a type of banking system under which the banking operations
are carried with the help of branch network and the branches are controlled
by the Head Office of the bank through their zonal or regional offices. Each
branch of a bank will be managed by a responsible person called branch
manager who will be assisted by the officers, clerks and sub-staff.
• In England, India U.K., Canada and Australia, this type of branch banking system
is in practice.
SERVICES PROVIDED AT BANK BRANCHES
 Account opening  Deliverables, such as credit
 Cash payments cards, debit cards, PINs.
 Cheque book issue  Acceptance of queries and
complaints
 Stop payment of cheques
 Investment services
 Closure of fixed deposits and
premature withdrawals
 Issue of DDs
 Foreign exchange services
 Demat services
BANK HIERARCHY
BANK
MANAGER

ASSISTANT
MANAGER

BRANCH
RELATIOSHIP
OPERATION
MANAGER MANAGER

WELCOME
TELLER 1 TELLER 2 DESK SALES TEAM
EXECUTIVE
ADVANTAGES OF BRANCH BANKING
• LARGE FINANCIAL RESOURCES:
 Requirements of large customers can be met
 Loans and advances on a more liberal scale can be made

• PROPER DISTRIBUTION OF CAPITAL :

 Transfers capital from regions which have a surplus to those regions which require capital
 Capital can be properly used by investing in the profitable branches

• GREATER PUBLIC CONFIDENCE :

 With huge financial resources and wide dispersal of branches at its command, it increases
the confidence of the general public.
• RISK DISTRIBUTION :
 It allows for the geographical distribution of risks
 Losses incurred by one branch can be offset by the profits earned by other profit making
branches

• EASY TRANSFER OF FUNDS :

 Since the branches of bank under branch banking are spread all over the country, it is easier
and cheaper, for it to transfer funds from one place to another.

• GREATER BANKING FACILITIES :

 The banking facilities can be made available to all cities, towns, and even backward areas in
the country
 Branch banking is very helpful in achieving a balanced growth of the country's economy
• BETTER STAFF TRAINING :
 Gives better opportunity for training, development and growth of employees
 Acquires knowledge and experience about the various aspects of banking business

• CENTRAL BANKING CONTROL EFFECTIVE :

 Under a system of branch banking, it is more convenient for the central bank or the
government to regulate and supervise the activities of banks, as control becomes more
effective and easier since only the head office is to be dealt with for the purpose.
DISADVANTAGES OF BRANCH BANKING
• DIFFICULTY OF MANAGEMENT :
 Difficulty in supervision and control of banking activities

• HEAD OFFICE SYNDROME :

 Since branches depend upon the head office for decision making, there is a complete lack of
initiative on important banking problems confronting them.
 Leads to considerable delay in banking business.

• BANKING MONOPOLY :
 A large part of banking activities are controlled by the head office, a handful of high bank
officials dominate the entire working of the bank.
• EXPENSIVE PROPOSITION :
 Expensive to open and maintain a number of branches at a different places.
 Additional labour forces entails additional expenditure
 There is also a problem coordinating their activities

• OBSTRUCTURED GROWTH :
 The financial resources of economically backward areas tend to get transferred to
industrial and business centers for the purpose of investment. Due to which backward
areas continue to be neglected and remain over backward.
BRANCH BANKING V/S UNIT BANKING
BASIS FOR COMPARISON UNIT BANKING BRANCH BANKING

Meaning Unit banking is that system of banking
in which there is a single small banking
company, that provides financial
services to the local community.
Local economy Affected by the ups and downs of the
local economy.
Independence of operations More
Branch banking is a banking method
wherein a bank operates in more
than one place to provide banking
services to customers, through its
branches.
It is not affected by the ups and
downs of the local economy.
Comparatively less

Supervision Cost Low Comparatively high

Financial Resources Limited financial resources Large pool of financial resources

Competition No or little within the bank Exist between the bank branches

Rate of interest Not fixed, as the bank has its own Fixed by the head office, and
policies and norms. directed by the central bank.
Decision making Quick Time Consuming
QUIZ
1. Branch Banking means ?
a. Bank runs branches accepting deposits only
b. Bank operates through branches to make deposits and
forward loans
c. Banks do not having branches
d. None of these
2. ____________ refers to a bank which is a
single and small bank that provides financial
services to its local community.
a. Investment banking
b. Branch banking
c. Group banking
d. Unit banking
e. None of these
3. Which of the following banks became the
first Indian bank to open a branch outside
India?
a. SBI
b. ICICI Bank
c. Axis Bank
d. Bank of India
4. The Other names of Reserve Bank of India
are
a. Central bank
b. Apex bank
c. Lender of the last Resort
d. Banker’s Bank
e. All of the above
5. Where is the headquarter of National Bank for
Agriculture and Rural Development(NABARD)?
a. Mumbai
b. New Delhi
c. Kolkata
d. Chennai
6. Canara Bank has partnered with which of the
following telecom company to upgrade
bandwidth at all of its branches?
a. Bharti Airtel
b. BSNL
c. Reliance Jio
d. Idea
7. Which of the following banks launched the
first talking ATM for differently-abled persons?
a. UCO Bank
b. Union Bank
c. ICICI Bank
d. HDFC Bank
8.Today is Monday. After 61 days, it will be ?
a. Thursday
b. Sunday
c. Monday
d. Saturday
9. RQP, ONM, LKJ, ____, FED
a. IHG
b. CAB
c. JKL
d. GHI
10. Find the odd man out.
1, 8, 27, 64, 125, 196, 216, 343
a. 64
b. 196
c. 216
d. 1
 THANK YOU

Reference
- B a n k i n g a n d f i n a n c i a l s y s t e m , S u n d a r a m a n d Va r s h ey
- B a n k i n g t h e o r y - L a w a n d P r a c t i c e , D r. s . G u r u s a m y