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Definition

Branch Banking Organizations

Definition (1):

Branch banking is a system where the banking business is carried on by a single bank with a network of branches throughout the length and breadth of the country. The bank will have a head office in one town and branches in different parts of the country. The branch manager following the regulations and policies of the head office directs the affairs of the branch. Each bank is a single entity owned by a group of shareholders and controlled by a group of directors.

A bank may decide to establish branch banking organizations, when regulation permit, particularly if it serves a rapidly growing region and finds itself under pressure either to follow its business and household customers as they move into new areas or lose them to more conveniently located competitors.

Definition (2):

Branch banking organizations operate from storefront locations away from the home office of the financial institution for the customers’ convenience. 

In the United States, the operation of these organizations has gone through mentionable changes for responding to the more consolidated and competitive financial services since the 1980s. These banking organizations have been permitted for selling insurance and investment products along with banking services since 1999; which is one of the most mentionable among these changes.

Branch banking organizations allow banks to expand their services outside of their home locations and into smaller storefronts that operate as extensions of their greater functions. For some banks, it can be a cost-saving approach. These banking organizations allow smaller offices to give key services while larger offices can have additional offerings.

 

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