Industrial banks provide loans to individuals and companies in specific industries, often owned by nonfinancial corporations and subject to the same regulations as banks owned by financial corporations. They may focus on short-term loans for individuals or specific loans related to the owner’s industry. Industrial banks do not offer the same range of services as other banks and are mainly focused on lending activities. They may have branches in multiple states, with the majority incorporated in Utah.
An industrial bank is a financial institution that makes loans to individuals and companies that are associated with specific types of industry. This example of a limited service bank is often owned by a nonfinancial corporation, and is generally subject to the same regulations and protections offered through banks owned by financial corporations. While the general idea of the industrial bank is found in several countries around the world, the term itself is used almost exclusively in the United States.
The exact model for an industrial bank will vary somewhat, depending on the sector of the consumer market that serves as the target audience for the operation. The bank may focus on making loans to people who work within a certain industry, and many of them are simple, short-term loans to buy a car or do minor home repairs. Some will make mortgages and other long-term loans to individuals, but it’s more common to reserve these types of loans for businesses.
Another focus of an industrial bank may be to make loans for specific purposes related to the owner of the institution. For example, a furniture manufacturer may establish industrial banks as a means to manage the financing of the purchase of its products, either by furniture stores or by persons who meet the credit requirements established by the institution. This approach can sometimes simplify the process of obtaining financing and may even provide the customer with slightly better interest rates and other repayment terms than could be obtained elsewhere.
It is important to note that an industrial bank does not always offer the same range of services as other banks. Most will focus solely on lending activities and will not provide other types of accounts for their clients. For this reason, any individual or business that does business with such a credit institution will also maintain bank accounts at other institutions, including checking and savings accounts.
In the United States, an industrial bank may have branches located in multiple states, with the institution licensed in one of the states where it has a presence. Not all US states allow the creation of an industrial bank, although the number is speculated to increase in the coming decades. Of all the states that currently allow industrial bank incorporation, the majority are incorporated in the state of Utah. Other states that currently allow such banks to be incorporated include California, Hawaii, Minnesota, and Indiana.
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