Different Types of Banking – A Brief Overview

Different types of Banking is a very important topic when it comes to Banking and Government Exams especially RBI Grade BRBI AssistantSEBINABARDSIDBISBI PO, IBPS PO etc. Here we provide you all the definitions and brief overview of different types of Banking. Read about the different types of Banking that the Banks undertake and learn to differentiate among them.

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Sample Questions

Q. Which type of Banking allows a financial institution to expand its services to an area outside of the home location, functioning as an extension of the home location?

(1) Unit Banking

(2) Branch Banking

(3) Shadow Banking

(4) Para-Banking

Correct Answer: (2)

Q. What is mixed banking?

(1) It is the system in which banks undertake activities of commercial and investment banking together. 

(2) It is a type of Banking in which all the operations are performed from a single branch

(3) It is a type of banking where banking transactions are held directly with customers.

(4) It is a banking system wherein the Banking operations are performed online.

Correct Answer: (1)

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VARIOUS TYPES OF BANKING

There are several different types of Banking, all serving different types of needs of the customers. In this eBook, we will learn about various types of Banking and relevance of each type.

  1. Branch Banking: Branch banking is engaging in banking activities such as accepting deposits or extending loans at facilities or locations away from a bank’s home office or headquarter. 
  2. Unit Banking: In unit banking, all the operations are performed from a single branch.
  3. Mixed Banking: Mixed Banking is the system in which banks undertake activities of commercial and investment banking together
  4. Wholesale Banking: Wholesale banking involves banking services for high net-worth clients like corporate, commercial banks, mid-size companies etc.
  5. Retail Banking: Retail banking means where banking transactions are held directly with customers.
  6. Universal Banking: Universal banking is a system of banking under which big banks undertake a variety of banking services like commercial banking, insurance, investment banking, merchant banking, mutual funds etc.
  7. Relationship Banking : In Relationship Banking, the customer needs are understood by the banks and then appropriate banking services are offered to the customers according to their needs.
  8. Virtual Banking: Virtual Banking refers to a banking system wherein the Banking operations are performed online
  9. Chain Banking : Chain banking system refers to the type of banking wherein a group of persons come together to own and control three or more independently chartered banks
  10. Correspondent Banking : It helps Banks’ customers perform banking operations and transactions at any place with ease without the physical presence of their Bank branches there

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