Universal Banking System

Universal Banking systems are a system of banking where banks are allowed to provide a variety of services to their clients. Here, banks are not limited to only loans, current and savings accounts, and other similar activities, but are also allowed to offer investment services.

Universal banking is a system in which banks provide a wide variety of comprehensive financial services, including those tailored to retail, commercial, and investment services. Universal banking is common in some European countries, including Switzerland. Universal banks may offer credit, loans, deposits, asset management, investment advisory, payment processing, securities transactions, underwriting, and financial analysis. 

Under this system, banks can choose to participate in any or all of the permitted activities. They are expected to comply with all guidelines that govern or direct proper management of assets and transactions. Universal banking is advantageous to India as it promises expansion of the activities of all Indian development banks into traditional commercial banking activity such as working capital finance and the participation of commercial banks in project finance, an area earlier confined to all India Financial Institutions.

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