Universal Banking

Universal Banking

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A look at the three types of Universal Banking Services Available in India.

Key Takeaways

  • Universal banks are one-stop shops for all your financial needs.
  • Universal banking is categorised into three types.
  • It encompasses investment banking services for private investors and organisations.
  • It also involves wholesale banking services designed for large-scale companies.
  • Retail banking is another aspect of universal banking that includes everyday banking services.

That banking services have evolved tremendously is an understatement. Today, a bank serves as a wholesome financial house, offering a host of facilities that transcend mere accounts and deposits. Most Indian banks have become a one-stop-shop for all your financial needs. This transition has given birth to the idea of universal banking. Let us understand universal banking in India and its various types.

The Meaning of Universal Banking

A universal bank is nothing but a commercial bank with additional authority to act as an investment house and invest its money in non-allied companies. It is a system through which banks offer their regular, retail, and high net worth customers a bouquet of comprehensive financial services, including customised or tailored investment, retail, and commercial services.

Under universal banking, you get easy access to facilities like credit requirements, deposits, securities transactions, asset management, financial analysis, and underwriting services, among other things. Essentially, you get all the required financial services under one roof. This facility reduces your transaction costs and saves you precious time as well.

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Types of Universal Banking Services

Universal Banking Services in India are broadly categorised into three types based on their functionality. They are as under:

  1. Investment banking services

    Several public and private sector banks in India have started offering investment banking services. Such banks typically focus on providing services to various private investors and organisations. Also known as merchant banking, these banks generally offer their clients assistance with asset management, investment advisory services, raising capital, mergers and acquisitions, securities underwriting and securities trading, among other facilities. As is apparent, these functions of universal banking do not apply to everyday banking services.

  2. Wholesale banking services

    Wholesale Banking Services are typically designed for businesses and corporate organisations, as opposed to individual bank customers. These services usually involve lending and borrowing funds on a large scale, compared to retail banking services that deal with comparatively smaller loan amounts for individual customers. Each transaction in wholesale banking is typically in the tunes of crores of rupees and multiple accounts. For instance, a customer of a wholesale bank may need pension fund accounts for its employees. Government organisations and multinational companies are typically customers who obtain wholesale banking services.

  3. Retail Banking Services

    Retail banking is the most common type of universal banking service available globally. It is the type of banking that general bank customers and account holders are provided. Retail banking encapsulates the general banking facilities that include a wide variety of home, auto and personal loans and mortgage services. It also includes offering different types of bank accounts – Salary, Current, Savings Accounts, and more. Banks provide safe deposit lockers, fixed and recurring deposits, credit and debit cards, and other such everyday banking services under retail banking.

Final Note

With growing competition in the banking sector, most Indian banks are adopting a universal banking model to cater to the needs of their various clients. Universal banking enables banks to broaden their customer base. As a bank customer, you can enjoy an array of facilities under one umbrella, thanks to universal banking services.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.

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