Question

Suggest measures to overcome the demerits of unit banking

Answer 1

Answer:

Unit banking refers to a bank that is a single, usually small bank that provides financial services to its local community. A unit bank is independent and does not have any connecting banks — branches — in other areas.

Answer 2

Based on the main demerits of the unit banking,some of the corrective measures to overcome these constraints can include better crisis management,development of banking services in backward and rural areas,ease the process of banking,unification of management to reduce unnecessary competition and encouraging division of labor.

Explanation:

Measures to overcome demerits of unit banking:-

1. Better crisis management:Unit banking system needs to improve the crisis management measures.They should develop a strong internal crisis management system to better tackle any financial crisis and liquidity in sufficiency as they cannot easily receive financial assistance from federal administration. or other commercial banks.
2. Banking services in backward and rural areas:The system should focus on enhancing banking services in the backward and underdeveloped areas by establishing more branches,subsidiary businesses,ATMs and adjoining services such as investment schemes and insurance facilities.
3. Simplifying the banking services:It is important that the unit banking implements easier banking services and facilities for the customers.This might include less paperwork and documentation involved in any service such as loans or opening any account.More use of technology might also help this process.
4. Unification of management:Different unit banks are operated and owned different management groups which create administrative disparity and unnecessary competition.Therefore,an unified management system is required for unit banks.
5. Higher division of labor:Due to smaller size of the unit banks,there is less division and division of labor which creates chaotic and disordered work environment.Hence,work division and specialization is extremely important for the unit banking system.