Which type of banking system exists in India?

The correct answer is - Branch banking

Key Points

• Branch banking
  • Branch banking refers to a banking system where a single bank operates multiple branches across different locations.
  • This system allows the bank to reach a larger customer base and provide services in multiple regions.
  • Branch banking promotes financial inclusion by making banking services accessible to rural and remote areas.
  • In India, most public and private sector banks operate under the branch banking system, including the State Bank of India (SBI), ICICI Bank, HDFC Bank, etc.
  • This system helps in the efficient management of resources and risk distribution across different branches.

Additional Information

• Free banking
  • Free banking is a banking system where banks are minimally regulated, and there is no central bank to control the monetary policy.
  • This system was prevalent in the 19th century in some countries but is not commonly practiced today.
• Dual banking
  • Dual banking refers to a system where two sets of banks operate simultaneously under different regulations, often seen in countries with both Islamic and conventional banks.
  • This system allows customers to choose between different banking principles and services.
• Unit banking
  • Unit banking is a banking system where a bank operates only one branch or a single office, usually seen in smaller community banks.
  • This system is less common in large economies and is more prevalent in smaller towns or rural areas.