7. Acceptances and Endorsements: As discussed earlier, this item appears as a contra item on both sides of the balance sheet. 8. Fixed Assets: Fixed assets include building, furniture and other property owned by the bank. This item includes the total volume of the movable and immovable property of the bank. Fixed assets are referred to as „dead stocks‟. The bank generally underv alues this item deliberately in the balance sheet. The intention here is to build up secret reserves which can be used at times of crisis. Balance sheet of a bank acts as a mirror of its policies, operations and achievements. The liabilities indicate the sources of its funds; the assets are the various kinds of debts incurred by a bank to its customers. Thus, the balance sheet is a complete picture of the size and nature of operations of a bank. 8.6 UNIT BANKING VS BRANCH BANKING The banking system in different countries vary substantially from one another. Broadly speaking, however, there are two important types of banking systems, viz., unit banking and branch banking. A. Unit Banking „Unit banking‟ means a system of banking under which banking services are provided by a single banking organisation. Such a bank has a single office or place of work. It has its own governing body or board of directors. It functions independently and is not controlled by any other individual, firm or body corporate. It also does not control any other bank. Such banks can become member of the clearing house and also of the Banker‟s Association. Unit banking system originated and grew in the U.S.A. Different unit banks in the U.S.A. are linked with each other and with other financ ial centres in the country through “correspondent banks.” Advantages of Unit Banking Following are the main advantages of unit banking: 1. Efficient Management: One of the most important advantages of unit banking system is that it can be managed efficiently because of its size and work. Co-ordination and control becomes
BAMIDELE RAPHEAL effective. There is no communication gap between the persons making decisions and those executing such decisions. 2. Better Service: Unit banks can render efficient service to their customers. Their area of operation being limited, they can concentrate well on that limited area and provide best possible service. Moreover, they can take care of all banking requirements of a particular area. 3. Close Customer-banker Relations: Since the area of operation is limited the customers can have direct contact. Their grievances can be redressed then and there. 4. No Evil Effects Due to Strikes or Closure: In case there is a strike or closure of a unit, it does not have much impact on the trade and industry because of its small size. It does not affect the entire banking system.
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- Summer '19
- Economics, Fiat Money