Branch Banking

Branch banking - a popular system of banking in the sub-continent as well as in many other countries of Asia and Africa - refers to a system of banking where a large bank having a Head office operates through a network of branches throughout the country and abroad. In case of smaller banks, however number of branches may be small located in particular area.

The business of banking under Branch banking system is conducted in the branches whereas Head Office works as controlling and monitoring unit. No banking is performed at the Head office. The branches are managed by the Managers posted for the purpose. They run the operations on the basis of guidelines and manuals provided to them by the Head office. Under Branch banking system, a bank may have as many branches as it can profitably manage. Each branch is however, treated as a separate unit for assessing its performance.

The main characteristics of Branch banking may, therefore, be summarized as follows:

1. The bank having a Head office or registered office is guided, managed and controlled by a single Board of Directors, of which Managing Director (Chief Executive Officer) is the ex-official member. 
2. Actual banking operations are conducted at the branches and those are controlled, monitored and guided by the Head office through guidelines, instruction manuals, statements and returns.
3. Day-to-day management of the bank is vested with the Managing Director or Chief Executive Officer (CEO) who operates through other officials at Head office. 
4. Branches are managed by the Managers having appropriate business, financial and administrative powers delegated to them by the Head office.
5. Each branch is treated as a separate unit for business and performance purposes. But while assessing the performance of the bank, the performance of all the branches are aggregated.