There are different types of banking institutions operating in a country. One type of bank performs one type of banking.
The pace of development is not the same in all countries of the world. Different countries have different economic organizations and different countries have different banking systems. However, there are some influences at the root of all kinds of economic and banking development. Based on these effects and effectiveness, different types of classifications are made in terms of the structure of the banking system. The structure of banking is briefly discussed below-
1- Single banking
A bank that conducts banking activities in a specific area or population through only one office is called single banking. The scope of this bank is limited as it provides services through a single branch or office. Such banks are generally called one-stop banks. However, it can also be a single banking partnership and joint venture company. There is no single banking in our country. The first single banking system was introduced in the United States.
2- Branch Banking
The banking activities that are conducted through different branches under a principal or main branch are called branch banking system. This means that the branches are operated at home and abroad through the main branch and provide various banking services.
In short, the branch banking system is a massive banking system. This type of banking system originated in the United Kingdom. All the bank branches operated in our country are covered under banking.
3- Chain banking
Some individual banks, while maintaining their own entity, are consolidated into a common banking institution through special strategies and are called chain banking if they are to be managed and regulated under a single control. In fact, the main purpose of chain banking is to stop mutual competition and manage banking activities in the interest of each other, divisionalization, achieving economy, joint promotion, etc. There is no introduction of chain banking in our country.
4- Group Banking
When similar but relatively weak banks merge and perform functions under one strong bank, it is called group banking. Consolidated banks are called subordinate banks and the bank under which weak banks are consolidated is called holding bank.
5- Mixed banking
The type of bank that performs the functions of both specialized and commercial banks is called a mixed bank. In other words, mixed banks, on the one hand, perform specialized functions as well as commercial functions. Such banks provide long-term and medium-term loans to industrial and other manufacturing companies and short-term loans to business organizations. Mixed banks accept people’s savings as deposits and invest them in various sectors. However, the big commercial banks in our country provide long-term loans and also perform the functions of some mixed banks.
6- Merchant Banking
Merchant Bank is a bank formed by a combination of exchange banking and investment banking. In foreign trade, these banks issue certificates to the customers, recognize the bills raised by the exporters and pay the bills. Merchant banks provide long-term loans, invest in joint ventures, and act as creditors.