• Banking System in USA

    From regulatory perspective, the Banking System in the USA is very different from the Indian banking system. Bank in United States can be classified into 2 main categories:

    • Federally chartered national banks
    • State-chartered banks

    National banks are incorporated and operated under the laws of the United States. These banks are subject to the approval office of the comptroller of the currency (OCC). Membership of Federal Reserve System is required for all national banks. The biggest advantage of belonging to the Federal Reserve System is that deposits in the member banks are automatically insured by the FDIC. The FDIC protects each account in a member bank for up to $100,000 if the member bank becomes insolvent.

    State-chartered banks are granted authority by the state in which it carries out business and are under the regulation of an appropriate state agency. State-chartered banks can choose to belong to the Federal Reserve System to ensure they are insured by FDIC. Non-members banks of the Federal Reserve System can also be protected by the FDIC if they can meet certain requirements and submit an application for the same.

    Based on business activities, banks in the Unites States can be divided into mainly 3 types. They are

    • Commercial banks
    • Savings & Loan Associations
    • Credit Unions

    Commercial banks are in the business of deposit taking and lending. They provide a range of products and services for individuals as well as businesses.

    Savings & Loan Associations provide savings account facilities for the purpose of deposits and offer mortgage lending also. Most of the savings & loan associations provide a wide range of services similar to a commercial bank.

    Credit Unions are non-profit financial cooperatives offering personal loans and other consumer banking services.

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