UNIVERSAL BANKING---
- Single bank entity is carrying out multiple banking activities as that of a commercial bank as well as of an investment Banking and other financial related services as insurance etc.
- All these services are provided under one roof and handled by financial experts who can deal with different products.
- Universal Banking is usually undertaken by large banks that can manage the cost of such widespread operations.
- The concept of Universal Banking was culmination of Narasimham Committee and S.H. Khan Committee Reports which recommended for consolidation of the financial industry of India.
- The practice of universal banking is common in European countries .
Benefits of Universal Banking :
- Economies of Scale leading to greater economic efficiency in the form of lower cost, higher output ,increased profitability, Better Resource Utilization and better products.
- Services under one roof will save a lot of transaction costs resulting.
- Brand name leverage,
- Existing clientele leverage,
- Value added services and
- ‘One-stop shopping’
Issues in Universal Banking:
- Number of financial services are there and each have to satisfy a unique set of regulations which often makes the operations complex.
- Universal banking being exclusive affairs of the big players in banking, so it will be open to the fears of monopolising the markets.
- Too Big to Fail -These banks so big that the failure of the bank will shatter the economy of country .
The commercial banks are
moving towards the concept of Universal banking as single bank is providing all
types of services to the customers.
