Definition Of

Group Banking

Group banking is a system where a group of banks are brought under the control of a holding company. The holding company controls the affairs of all units in the group. But each bank in the group maintains its separate identity. The purpose of group banking is to unify the management of banks, to achieve economies of large-scale operation and to grab more power.

Under group banking system, both banking and non-banking companies may become subsidiaries of a holding company.Banks acquired by holding companies are referred to as affiliated banks (subsidiary company).

The chief advantage of this system is that each bank need not carry large cash reserve; such cash reserves are concentrated in one or few member banks of the group. In times of need the bigger banks will help the smaller banks. Secondly, economies of large-scale production can be achieved by cutting down operating cost, by purchasing supplies in bulk and improving the efficiency of management.


Share it:

More from this Section

  • Depositary receipts
    Depositary receipts or depositary shares are negotiable certificates issued by a bank to represent the underlying shares of stock, which are held in trust ...
  • Multimodal transport bill of lading
    Multimodal transport bill of lading bill of Lading used for carriage whenever there are at least two different forms of transport, such as
  • Adverse opinion
    Adverse opinion is an independent auditor's opinion expressing that a firm's financial statements do not reflect the company's position accurately.
  • Bank Letter of Credit Policy
    Bank Letter of Credit Policy is a policy that enables banks to confirm letters of credit by foreign banks supporting the purchase of U.S. exports.
  • Transactions
    Transactions (business transactions) are a business’s economic events recorded by accountants. Transactions may be external or internal.
  • Discount a Bill
    Discount a Bill is to discount a bill means to purchase a Bill of Exchange before it is due for payment for the amount estimated to be
  • Grossing up
    Grossing up refers to the policy of a parent corporation that takes the full before-tax foreign income of a foreign corporation— apportioned by its proportional ...