FAQs on Types of Banking (Lecture # 3) Para banking ; Narrow Banking ; Offshore Banking ; Unit Banking

Question 1

1. What is para banking?

Accepted Answer

Ans. Para banking refers to a range of financial services and activities provided by entities that are not traditional banks but operate in a similar manner. These entities may include non-banking financial institutions (NBFCs), insurance companies, mutual funds, and other financial intermediaries.

Question 2

2. What is narrow banking?

Accepted Answer

Ans. Narrow banking is a concept where banks limit their activities to accepting deposits and providing safe custody services for those deposits. Narrow banks focus solely on low-risk activities and avoid engaging in lending or investment activities to minimize the risk of financial losses.

Question 3

3. What is offshore banking?

Accepted Answer

Ans. Offshore banking refers to the practice of keeping money in a bank located outside one's home country. Offshore banking often offers financial privacy and tax advantages to individuals and businesses. It is commonly used for international trade, investment diversification, and asset protection.

Question 4

4. What is unit banking?

Accepted Answer

Ans. Unit banking is a system where a single bank operates as an independent entity without any branches. Unlike branch banking, unit banking does not have a network of branches spread across different locations. Unit banks are typically smaller in size and serve a limited geographic area.

Question 5

5. What are the advantages of offshore banking?

Accepted Answer

Ans. Offshore banking offers several advantages, including financial privacy, asset protection, and tax optimization. It allows individuals and businesses to diversify their assets internationally, access higher interest rates, and facilitate cross-border transactions. Additionally, offshore banks often provide a stable banking environment and access to a wider range of international financial services.

Types of Banking (Lecture # 3) Para banking ; Narrow Banking ; Offshore

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