Universal banking
Also called: Universal bank · Topic: Banking Regulation, NPAs and Financial Stability · NCERT: Beyond NCERT
Meaning
Universal banking means one institution offers many financial services under one roof. These include commercial banking (deposits and loans), investment banking (helping firms raise money in markets), insurance and other services. Customers get a one-stop shop, and the bank earns income from many sources. But the bank also takes on many kinds of risk, so it needs close supervision.
Example
In India the idea was taken up by the Khan Working Group in 1997. After that, development finance institutions (DFIs), which gave long-term project loans, turned into full banks: ICICI in 2002 and IDBI in 2004.
Don't confuse with
- Differentiated banking: specialised banks, such as payments banks and small finance banks, that may do only a limited set of activities.
- Narrow banking: a bank that invests deposits only in safe assets, at the other end of the range from universal banking.
Related concepts
- Scheduled bank
- Public sector bank
- Urban cooperative bank
- Narrow banking
- Financial repression
- Islamic banking