Types of Banking in India
There are several types of banking undertaken by various types of banks all over the world. On the basis of the organization, the banking may be either Branch Banking or Unit Banking. On the basis of their lending practices, it may be pure banking or mixed banking. On the basis of their products, it can be retail banking or wholesale banking. On the basis of activities undertaken, two extreme types of banking are narrow banking and universal banking. From the ownership point of view, it can be chain banking or group banking. Further, there are some other peculiar types such as Investment banking, Islamic Banking etc. In modern times, virtual banking or internet banking and mobile banking are very popular.
Some of the types of banks have been discussed below:
Branch banking is the most common type of banking and still an integral part of Indian banking system as most Indians still believe in cash transactions and prefer to visit banks in person for routine banking operations. More information about branch banking in India, click here.
Unit banking, which originated in US, is a limited way of banking where banks operate only from a single branch (or a few branches in the same area) taking care of local community. The size of banks is small as compared to branch banking. More information about unit banking is here and about difference between unit banking and branch banking is here.
When the banks undertake activities of commercial and investment banking together; it is called mixed banking. Mixed banking promotes rapid industrialization. More information about mixed banking is here.
Chain banking system involved when a group of persons came together to own and control 3 or more independently chartered banks. More information about chain banking is here.
Retail banking means banking where transactions are held directly with customers and there are no transactions with other banks or corporations. More information on Retail Banking is here.
Wholesale banking involves banking services for high net-worth clients like corporate, commercial banks, mid-size companies etc. More information about wholesale banking is here.
Relationship banking is a banking system in which banks make deliberate efforts to understand customer needs and offer him products accordingly. More information about relationship banking is here.
Correspondent banking prevalent in over 200 countries is a profitable way of doing business by banks in foreign countries in which they don’t have physical presence or limited operational permissions. More Information is here.
Rural banking has changed the dynamics of rural economy and made rural people more self-sufficient. They have moved from the clutches of the traditional and informal finance by money-lenders and embraced the benefits and ease of the new banking channels. More information is available here.
Universal banking is a system of banking under which big banks undertake a variety of banking services like commercial banking, investment banking, mutual funds, merchant banking, insurance etc. More information on universal banking is available here.
The Narrow Banking is very much an antonym to the Universal Banking. Narrow Banking means Narrow in the sense of engagement of funds and not in activity. So, simply, Narrow Banking involves mobilizing the large part of the deposits in Risk Free assets such as Government Securities. More information is available here.
Social banking system has caught the eye of bankers internationally especially after the economic crisis which left many homeless, jobless and without any savings. More information about social banking is here.
Virtual or internet banking is a system where all the transactions of the bank are done online and there are no physical branches of the banks. Molre information about Virtual Banking is here.
Islamic banking is banking or banking activity that is consistent with the principles of sharia and its practical application through the development of Islamic economics. More information is available here.