Types of Bank

Types of Bank

Bank may be classified are as follows:
a) Based on organizational Characteristic
b) Based on Technique

a) Based on organizational Characteristic:

 1. Branch Banking: 
A banking system where operation of branches that situated in different parts of the country or even in abroad executed under control of the corporate office. Branch office has no different identity. Branch office works as a representative and follow all instructions/circulars of corporate office for performing banking activities. It has many branches in local and abroad.

2. Chain Banking:
When two or more banks are operated and controlled jointly by keeping separate identity in order to avoid risk and competition among themselves termed as chain banking. It’s objectives are to improve jointly. This types of banking systems were available before 1920 in USA.

3. Holding Company Banking or Group Banking:
 Holding company banking/ group banking system actually refers two or more banks, which are held as subsidiaries by holding company. It is also called holding company bank. The largest company purchases other weak bank’s maximum shares. As a result, Strong bank represent weak bank as a subsidiary bank.In 1930 in USA, this types of banking started.

4. Unit Banking:

Operations of banking system are conducted by a single office/unit. It has no branches. It generally collects deposit from the small communities in that particular arena and places those deposits with bigger bank. Since the unit banks are small in size, they cannot provide remittance facilities to their customer. They have own capital, Board of directors and share holders.In Bangladesh there is no unit Bank.

 b)  Based on Technique:

1. Deposit Banking: 
 Deposit banking is collecting of different types deposits from the public and invest the same to their existing investment clients.

 2. Investment Banking: 
 Investment banks are the specialized institutions engaged in providing assistance to the commercial companies in raising their long-term capital through sale of shares, stocks, and bonds in the open market. The activities of investment banking may be classified as (a) Originating, (b) underwriting and (c) retailing on behalf of individual and institutional investors.

3. Merchant Banking: Merchant bank is a financial institution where mainly engaged in offering financial services and counsel to corporations and to rich individuals. The term can also be used to describe the private equity activities of banking. The main difference between an investment bank and a merchant bank is that a merchant bank invests its own capital in a client company whereas an investment bank entirely distributes (and trades) the securities of that company in its capital raising role.

 4.    Mixed Banking: Mixed banking usually  refers to combination of commercial banking and investment banking.