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Define Group banking

It is a system where two or more banks are controlled by a holding company. Thus, group banking is similar to chain banking except with the difference that instead of an individual or group of individuals or members of a family, an incorporated company having a separate legal entity holds majority of the voting power in the companies of the group. Such holding company may or may not be engaged in the banking business. Group banking brings the advantages of pooling of resources, economies of scale and reducing idle cash balances etc to the member banks. However, it has the disadvantages of lack of effective control over member units and under-utilization of resources of the member units particularly by the holding company.