QS Study

Classification of Bank on the basis of Organizational Structure

At present, the word “Bank” is considered as an economic term in all country. Banks are the financial institutions that are licensed to deal with money and its substitutes by accepting time and demand deposits, making loans, and investing in securities.

According to organizational structure, banks are classified into five categories.

Unit Bank: Which bank is directed and managed from a single office is called the unit bank. These banks have no other branch. In the USA unit banking is popular.

Branch Bank: In this banking system banks have many offices located in different places. Multiple office banking is branch banking. Another name of branch banking is the British Banking.

Chain Bank: When some banks work together to generate more capital then it is called chain bank. But they operate separately and they are independent.

Group Bank: Sometimes a financial institution buys a maximum share of some small bank and takes control of them. This is called group banking. Controlling bank is holding the company and the controlled banks are known as a subsidiary company.

Classification on the basis of scheduling

Banks can be classified on the basis of scheduling.

Scheduled Bank: Banks those are enlisted to central bank are called the scheduled bank. These banks are directed according to laws and rules provided by the central bank.

Non-scheduled Bank: These banks are established by the Banking Act-1991 but not enlisted by the central bank. Non-scheduled hank cannot enjoy the advantage provided by the central bank.