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Definition of Chain Banking

For the existence in competition some weak banks agreed to go on their banking activities on the direction of a single manage. Their purpose is to earn more profit and increase good will. This type of banking system is called chain banking. There may not be specified number for the bank. Such types of banks were found in U.S.A. before 1920. There is no chain banking system in Bangladesh.
According to M. C. Vaish- “The chain banking system is the control of two or more banking companies by a single person, by members of the same family.”
According to D.G. Luckett- “A banking chain is held together through ownership of two or more banks by the same individual.”
From the above definitions we find the following features of chain banking
  • Here some banks are joined
  • All banks are deal by the direction of a single manager
  • Every banks has a legal entity
  • They joined to compete.
In conclusion it can be said that it is a system where an individual or group of individuals or members of a family control the operations of two or more banks. The control is exercised either through holding majority of shares in each bank or inter-locking directorships. However, each bank retains its individual entity.