As the very name suggests, banking operations under Unit banking system are conducted by a single office/unit of the bank. The office is located in particular area having no other branches. It collects deposits from the small communities living in that particular area. In turn, it places those deposits with the banks in the cities. City banks, in turn, place those deposits with the bigger banks in the bigger cities. Thus all the banks get connected with each other directly or indirectly.
Since the Unit banks are small in size, the can not provide remittance facilities to their customers. For providing such facilities, however, they take the help of larger banks through a mechanism called correspondent relationship banking.
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