Universal Banking is one-stop service financial institution offering commercial banking, security services and insurance products, but regulating and supervising universal banks could be a complex issue.
Universal
Banking is a multi-purpose and multi-functional financial
supermarket providing both banking and financial Services
through a single window. As per the World Bank, "In
Universal Banking, large banks operate extensive network
of branches, provide many different services, hold several
claims on firms (including equity and debt) and participate
directly in the Corporate Governance of firms that rely
on the banks for funding or as insurance underwriters."
In
a nutshell, a Universal Banking is a superstore for
financial products, under one roof. Corporates can get
loans and avail of other handy services, while individuals
can deposit and borrow. It includes not only services
related to savings and loans but also investments. However,
in practice the term `Universal Banking ' refers to
those banks that offer wide range of financial services
beyond the commercial banking functions like Mutual
Funds, Merchant Banking, Factoring, Insurance, Credit
Cards, Retail loans, Housing Finance, Auto Loans, etc.
The
entry of banks into the realm of financial services
was followed very soon after the introduction of liberalization
in the economy. Since the early 1990s, structural changes
of profound magnitude have been witnessed in global
banking systems. Large scale mergers, amalgamations
and acquisitions between the banks and financial institutions
resulted in the growth in size and competitive strengths
of the merged entities. Thus, emerged new financial
conglomerates that could maximize economies of scale
and scope by building the production of financial services
organization called Universal Banking.
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