A banking unit is independent, and does not have any connecting banks nor branches in other areas. It has its own board of directors, shareholders and governing body. This is one of the factors that contributes to its difference with Bank Branching. In this article, we will take a step by step look at the Banking Unit products and features. First let’s take an in-depth look at the Banking Units as a type of Banking system.
It is a system of banking under which a single organization (bank) provides banking services. Banking activities are carried out through a singular office instead of through a collection or group of banks under the control of a single bank In unit banking. The controlling and operating unit of a banking unit is that single office.Â
The bank size and units of operation is small in the case of the Banking Unit system as compared to the Branch Banking System. A limited number of Banking Units may have smaller branches operating in a limited area. Hence still described as a localized banking system.
Benefits of Banking Unit
Localized Banking
People who live in a local area, town or even villages will be able to benefit from Banking Units. They can transfer money to availing loans. It can help make the life of a common man easier.
Effective Management
One of the most important parts of the benefits of a Banking Unit is that it can be efficiently managed because of its limited size and work. Coordination and control is also effectively carried out.
Deep Knowledge of Clients
The management of a Banking unit can easily acquire the personal information of its customers and that of local industries and their occupations. This way, the manager is well positioned to serve the customers appropriately. Here lies a greater chance of developing a friendly and personal relationship with the local entrepreneurs in this environment.
Customer Service
Banking units are able to render efficient service to their clients. They can concentrate on the limited area they cover and ensure that they provide the best possible service to their customers.
No effects of Strikes/Closure
The activities of a Banking Unit are not affected by strikes or closure. The organization still continues its operations because of its small size.
Local Development
The Banking Unit has the specialized knowledge of the problems and challenges faced by the people in the locality. With this knowledge, they are able to serve the needs of the local people in a better manner. This is something that will be almost impossible for branch banking to achieve.
No risk of fraud
In the case of Banking Unit, there is a stricter and closer control and monitoring of the management. This way there is no risk of any form of fraudulent activities.
Features of Banking Unit
These features are as a result of the nature of operation of Unit Banking. The features are as follows
Specific Area
Banking Unit performs its operations in a specific area where it is located. It doesn’t have any branches or other offices it is linked to. All of its activities are done in the local environment where it is located.
Single Office
It has only one unit office, this means there are no linked branches or offices connected to a Banking Unit.
Small Size
Banking Unit is limited to one single office. This makes it limited in size as compared to branch banking.
Size of Operation
For a Banking Unit, with limited space, capital and size, the scale of operation is quite small. It will not be able to provide huge loans to customers.
Efficiency in Management
The management of a Banking Unit is very efficient due to its small size of operations.
Ownership
A banking unit is established through partnership or joint stock companies. However , more often than not, the ownership is usually sole proprietorship.
Formation
The Banking Unit is easily formed. It requires a limited space and size of operations.
Lesser Capital
Lesser capital is a characteristics of a banking unit. The capital is limited because it is mostly provided by one or two persons.
Swift Decision
Decision making can be swift, since it takes only the management of that unit branch to make decisions. The manager can make fast decisions at the time of loan sanctioning.
Functionality
For a Banking Unit to provide banking services throughout the whole country, it will need the help of corresponding banking systems.
Legal Entity
Though a Banking Unit is usually owned by a single owner, it has a legal entity. This makes people have so much trust in this type of bank.