Advantages of Group Banking
The next are the major advantages of grouping banking system.
- Transfer of funds : This scheme ensures liquidity of fiscal resources. If a fellow member banking concern falls brusque of cash, it tin GET it from the other member’s bank. Further it is non necessary to keep a large cash resources past times each together with every banking concern of the grouping banking system.
- Economies of Large-Scale operations : This scheme too results inward an economic scheme inward promotion expenditure. The cooperation controlling the fellow member banks tin insert articulation advertisements inward the newspapers. Economies of large-scale operations tin too live on achieved past times cutting downward operating cost, past times purchasing supplies inward mass together with improving the efficiencies of the management.
- Maintaining Separate identity : Under this system, every member’s banking concern retains its ain carve upwardly identity together with maintains its ain board of directors. The primal administrative component division controlling the diverse members of the grouping tin accept steps to meliorate the score of efficiency inward their hateful solar daytime to hateful solar daytime working.
- Availability of Experts Services : Since the corporation controlling the fellow member banks inward a large sized corporation it tin easily obtain the services of experts inward the management of the problem organisation of the fellow member banks. This helps the fellow member banks to house their investments together with banking problem organisation on audio lines.
- New problem organisation : Under this system, the corporation tin too accept several steps to secure novel problem organisation for its fellow member banks.
Disadvantages of Group Banking
The scheme of grouping banking too suffers from for sure defects. The major defects are discussed equally under.
- Unsound policies : Under the system, a banking corporation equally good equally a non banking corporation may live on subsidiaries of the same asset society together with the asset company, inward its efforts to secure to a greater extent than profits may overlook audio banking principles, so landing into troubles.
- Lack of efficiency : This scheme may non live on conductive to the achievement of a high score of efficiency inward management, because the primal administrative component division is by together with large non inward a pose to enforce codes of bailiwick on fellow member banks.
- Corruption : This scheme too gives rising to corruption because all this stores, etc for the fellow member banks are purchased past times ane mutual purchasing organization, which may succumb to pressure, exert past times unscrupulous firms.
- Emergence of Monopoly : The grouping banking scheme may Pb to monopolistic tendencies inward banking industry.