1. Overview
  2. Universal Banking
  3. Functions
  4. Advantages of Universal Banking
  5. Disadvantages of universal banking
  6. Services of Universal Bank
  7. Conclusion


Universal banking is often outlined as a banking industry that provides a good vary of banking and money services (like insurance, development banking, investment banking, business banking, and different money services) compared to ancient banking institutions; in straightforward terms, it may be understood as a mixture of all 3 services that’s retail banking, investment banking, and wholesale banking. This method offers services like quality management, deposits, payment process, investment consultive, underwriting, securities transactions, money analysis, merchandiser banking, factoring, mutual funds, credit cards, auto loans, insurance, housing finance, retail loans, etc.

Universal Banking

A system of universal banking doesn’t place a compulsion on the collaborating banks to supply all of the mentions on top of services; rather, it permits them to decide on and provide a good vary of services. The collaborating banks during this system will forever opt for the services per their comfort, confidence, and specialization.

It permits universal banks to supply an improbable vary of services all below one roof. Collaborating banks should essentially have to be compelled to befit all the rules with reference to the effective management of monetary assets and transactions. The services offered by collaborating banks dissent from one bank to a different, and during this context, the laws applicable for every bank will dissent.


The two main functions of this method might be to control as a poster yet as an associate degree investment bank.

  • Commercial banking: Commercial banking is all concerning understanding and compliance with the essential money wants and expectations of a standard client. These banks provide regular services sort of a bank account, accounting, and credit for meeting the essential necessities of traditional customers. A customer’s credit rating is the deciding issue for the business banks to indicate their enthusiasm towards fulfilling their money wants and expectations. 
  • Investment Banking: These banks work with entities or customers that participate in immense savings. Investment banks settle for deposits from their customers so invest a similar in multiple areas. These banks provide an enormous type of investment portfolio with completely different levels of risk. Customers turn over their hard-earned savings to banks so they’ll invest a similar and generate gains for the previous. 

Advantages of Universal Banking

  • Customers’/ Investors’ faith- Banking corporations operational as universal banks hold equity shares of the many entities. It permits them to realize investors from the businesses during which they hold stakes. The investors can show a great deal of trust and religion in these banks and can find yourself transacting with them.
  • Optimum utilization of resources- Universal banks confirm that there’s the best utilization of all the resources. These banks value the customers’ ability to require risks and consequently use their resources. A client that’s capable of managing high risks, then the bank can counsel him or her of associate degree investment with a risky portfolio, and if a client isn’t that capable of managing high risks, then the bank can counsel him or her of associate degree investment with good and moderate risks.
  • Other benefits- Such banks even provide different blessings like diversification of risks, straightforward promoting, and offers an enormous vary of services which too below one roof.

Disadvantages of Universal Banking

  • Monopoly: Universal banks relish a monopoly within the market as these square measure larger banking establishments. This monopoly power will have potential repercussions on different banking establishments and therefore the public too. This monopoly power will even impact the economic development of the nation.
  • Different rules: they provide a spread of services. The services that square measure offered by such banks might dissent from bank to bank, and as a result of this, the foundations and laws applied to those banks will be utterly completely different.

Universal Banks in India

According to the run, the four candidates for universal bank license are: UAE Exchange and money Services Ltd, Repatriates Cooperative Finance and Development Bank restricted (REPCO Bank), Chaitanya India Fin Credit Pvt Ltd, and Pankaj Vaish and different.

Services of Universal Bank

Universal banks get to supply an enormous vary of banking and money services sort of a MasterCard, housing finance, auto loans, insurance, retail loans, factoring, merchandiser banking, mutual funds, underwriting, investment consultive, payment process, securities transactions, deposits, quality management, money analysis, etc.


Universal banking is often outlined as a mixture of investment banking, retail banking, and wholesale banking. It offers an improbable type of services that the normal banking industry and its competitors fail to supply. The system offers services like quality management, auto loans, insurance, deposits, investment consultive, underwriting, mutual funds, credit cards, securities transactions, money analysis, merchandiser banking, payment process, factoring, housing finance, retail loans, etc. Universal banks square measure a kind of advanced full service bank that provides associate degree exclusive vary of services below one roof. They’re updated versions of business banks, however not all business banks square measure universal banks.

About the Author

BankReed Admin

Banking Professional with 16 Years of Experience. The idea to start this Blogging Site is to Create Awareness about the Banking and Financial Services.

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