What are the advantages of Unit Banking?

Advantages of Unit Banking

Unit banking system has the following advantages:

1. Local Development:

Unit banking is localized banking. The unit bank has the specialised knowledge of the local problems and serves the requirements of the local people in a better manner than branch banking. The funds of the locality are utilised for the local development and are not transferred to other areas

2. Promotes Regional Balance:

Under unit banking system, there is no transfer of resources from rural and backward areas to the big industrial commercial centres. This tends to reduce regional in balance.

3. Easy Management:

The management and supervision of a unit bank is much easier and more effective than that under branch banking system. There are less chances of fraud and irregularities in the financial management of the unit banks.

4. Initiative in Banking Business:

Unit banks have full knowledge of and greater involvement in the local problems. They are in a position to take initiative to tackle these problems through financial help.

5. No Monopolistic Tendencies:

Unit banks are generally of small size. Thus, there is no possibility of generating monopolistic tendencies under unit banking system.

6. No Inefficient Branches:

Under unit banking system, weak and inefficient branches are automatically eliminated. No protection is provided to such banks.

7. No diseconomies of Large Scale Operations:

Unit banking is free from the diseconomies and problems of large-scale operations which are generally experienced by the branch banks.