What is the difference between Unit Banking and Branch Banking?

Unit Banking Vs. Branch Banking:

The banking system in different countries varies substantially from one another. Broadly speaking, however, there are two important types of banking systems, viz., unit banking and branch banking.

In the unit banking system, the bank’s operations are generally confined to a single office only. In this system, independent, isolated units perform banking business.

The American banking system still represents a typical example of unit banking which is predominantly a localised one.

In the U.S.A. unit banks are generally linked together by the ‘correspondent bank system’, which in a small measure, combines some of the advantages of branch banking, as it facilitates the remittance of funds from one part of the country to another.

On the other hand, in the branch banking system, each commercial bank is a very large institution having a large number of branches scattered all over the country and even outside.

Thus, branch banking is another name for de-localised banking which carries on business through a number of offices.

The best example of branch banking is, perhaps, British banking, but now it has become popular in all other countries of the world.

Even the American banking system has started moving towards a system akin to the English type, i.e., branch banking.