As Narrow Banking refers to restricted and limited banking activity, Universal Bank­ing refers to broad-based and comprehensive banking activities. Under this type of bank­ing, a bank will deal with working capital requirements as well as term loans for develop­mental activities.

They will be dealing with individual customers as well as big corporate customers. They will have expanded lines of business activity combining the functions of traditional deposit taking, modern financial services, selling long-term saving products, insurance cover, investment banking, etc.

Examples of universal bankers are Citigroup (formerly Citibank), Hong Kong and Shanghai Banking Corporation (HSBC). In Europe universal banks are known as “Banc assurance”. All type of financial services and fund- based (loans and advances) activities are undertaken by a bank under Universal Banking.

In India commercial banks like State Bank of India, Indian Overseas Bank and other banks generally provide loans and advances for short-term to meet working capital re­quirements of borrowing companies.


Likewise Developmental Financial Institutions like IDBI, ICICI provide only long-term finance for expansion and diversification of business activity.

There is now a move to allow banks and Financial Institution to provide both short-term and long-term finance to corporate under an umbrella system known as uni­versal Banking.