Banking refers to the business of accepting deposits from the public, safeguarding money, and providing financial services such as lending, transfer of funds, and payment facilities. Banks act as intermediaries between savers and borrowers and play a key role in the economy.

1. Commercial Banks: Provide services to individuals and businesses, including accepting deposits, granting loans, and facilitating payments. Examples: First Bank, GTBank, Zenith Bank.


2. Merchant Banks: Provide financial services to companies and governments, such as issuing shares and bonds, and do not usually serve the general public.


3. Microfinance Banks: Serve small businesses and low-income earners with loans, savings, and financial education.


4. Central Bank of Nigeria (CBN): Apex bank that regulates and supervises other banks, controls money supply, issues currency, and ensures banking stability.


5. Development Banks: Provide long-term financial assistance for sectors like agriculture, industry, and infrastructure.

1. Accepting Deposits: Banks provide safe custody for money through accounts such as savings, current, and fixed deposits.


2. Lending Money / Providing Loans: Banks give credit to individuals and businesses for personal or business purposes.


3. Transfer of Funds: Facilitate money movement via cheques, electronic transfers, and mobile banking.


4. Issuance of Cheques and Debit/Credit Cards: Customers can pay without carrying cash.


5. Safe Deposit Services: Banks provide lockers for valuables.


6. Advisory Services: Banks offer financial advice on investments, savings, and business planning.


7. Foreign Exchange Services: Banks help exchange currencies for trade or travel.


8. Payment of Bills and Salaries: Banks assist in paying utility bills, school fees, and salaries.

1. Safety of Money: Banks protect money from theft, loss, or damage.


2. Convenience: Banks make saving, paying, and transferring money easier.


3. Credit Facilities: Banks provide loans for personal and business growth.


4. Facilitation of Trade: Banks support domestic and international trade through payments, foreign exchange, and financing.


5. Economic Development: Mobilizing savings and providing credit creates jobs and supports industries.


6. Record Keeping: Banks maintain detailed transaction records.

1. Savings Account: Encourages saving with interest; mainly for individuals.


2. Current Account: Allows frequent deposits and withdrawals; mainly for businesses.


3. Fixed Deposit Account: Money deposited for a fixed period at a fixed interest rate.


4. Joint Account: Shared by two or more individuals.

1. Deposit: Money placed in a bank for safekeeping.


2. Withdrawal: Taking money out of a bank account.


3. Cheque: Written instruction to pay a specific amount.


4. Interest: Payment by banks to customers for savings or by borrowers on loans.


5. Loan: Money borrowed from a bank to be repaid with interest.

1. Fraud and Embezzlement: Misappropriation of customer funds or falsifying records.


2. Misleading Customers: Giving false information about interest rates, charges, or loan conditions.


3. Corruption and Bribery: Accepting bribes to approve loans or manipulate accounts.


4. Privacy Violations: Unauthorized sharing of customer information.


5. Discrimination: Denying services based on gender, religion, or ethnicity.


6. Conflict of Interest: Making decisions that benefit employees at the expense of customers.

1. Follow banking laws and regulations.


2. Maintain transparency in all dealings.


3. Provide accurate and honest information to clients.


4. Keep customer data confidential.


5. Ensure fair treatment of all customers.


6. Train staff regularly on ethics and professional conduct.

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Summary

Banking services involve accepting deposits, providing loans, transferring funds, and offering financial advice. Banks support trade, economic growth, and financial discipline. Ethical conduct is essential to build trust, ensure fair dealings, and promote sustainable development.

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Practice Questions

1. Define banking.


2. List four types of banks in Nigeria and their functions.


3. Explain five services provided by banks.


4. What is the importance of banking services to individuals and the economy?


5. Differentiate between a savings account and a current account.


6. What is the role of the Central Bank of Nigeria?


7. Explain how banks facilitate trade.


8. What is a fixed deposit account, and how does it work?


9. Mention three common ethical issues in banking.


10. Explain two ways to promote ethical banking.