TERM: SECOND TERM

WEEK: THREE

TOPIC: BANK SERVICES

SPECIFIC OBJECTIVES: By the end of the class, the students are expected to:

i. say the meaning of banks.

ii. mention types of banks.
iii. give examples of commercial banks in Nigeria
iv. write out the functions of commercial banks in Nigeria.
v. define cheque
vi. list the reasons for making banks dishonour cheques.

CONTENT

1. meaning of a bank
2. types of banks
3. functions of commercial bank
4. Types of Cheques
5. Services provided by commercial bank
NOTE I:

MEANING OF A BANK
Banks are financial institutions where money is put for safekeeping and where money can be
paid out to the owners when the need arises.

TYPES OF BANKS
Central Bank (CBN) is the government bank and which acts as the banker to other banks, the
Nigeria industrial Development Bank, Agricultural and Cooperatives Bank, Mortgage Bank and
Commercial Banks. Examples commercial banks are: First Bank of Nigeria (FBN) PLC, Union
Bank of Nigeria (UBN) PLC, United Bank for Africa (UBA) PLC, Zenith Bank (PLC),
Guaranteed Bank (PLC), WEMA Bank (PLC), Skye Bank(PLC).
FUNCTIONS OF COMMERCIAL BANK
1. Commercial banks accept deposits from customers into their different accounts for safe-
keeping and make it possible for them to withdraw the money when the need it.
2. They make payments on behalf of their customers. They perform investment services and
receive and pay dividends to their customers.
3. Commercial banks grant loans and overdrafts to aid their customers’ trade.
4. They provide foreign exchange to their customers to facilitate their foreign transactions.
5. They issue travelers cheques to their customers when travelling abroad for business.
6. They safe-guard valuables such jewelry, share certificates and other important documents.
7. Through e-banking facilities, they make withdrawals and transfers of money from one place
to another very easy and faster especially in the course of business

COMMERCIAL BANKS PROVIDE THE FOLLOWING BANKING SERVICES

1. Current Account: A current account is an account from which the owner can withdraw
money at any given time provided there is enough money in it. Cheques are normally used to
withdraw money from the current account. But with e-banking facility, a customer can also
withdraw money from his current account with ATM. Payments can also be made from the
bank account through a standing order.

CONDITIONS FOR DISHONOURING A CHEQUE

1. A bank can dishonor a cheque if the amount written on the cheque is more than the amount in
the drawer’s account.
2. The signature of the drawer does not agree with his specimen signature.
3. The cheque is not signed.
4. The cheque may be signed but has become stale. A stale cheque is an exchequer that is not
presented for payment before the end of six months of its issue.
5. There is a disagreement between the amount in figures.
6. The drawer does before the presentation of the cheque for payment.

Types Of Cheques
1. Open Cheque
2. Bearer cheque
3. Order cheque
4. Crossed cheque

Savings Account: A savings account is an account in which the money saved earns interest at
prevailing interest in the economy at the given time. Deposits made into a savings account are
not for a specified fixed period of time for the purpose of interest. Interest is paid on the money
kept in the savings account but the interest is lower than the interest on money kept in the fixed
deposit account. Withdrawal can be made from savings account at any time but not more than
four times in a month in order to earn the required interest. To save money in a savings account,
a customer has to fill in the savings form and complete a withdrawal form to withdraw money
from the account.

Fixed Deposit Account:A fixed deposit account in which money is kept for a specified period,
say, six months, one year, or more, before a customer can withdraw it. If a customer wishes to
withdraw money before the stated period, he has to give sufficient notice to his bank.

Bank Statement: The following details usually appear in the statement of account or bank
statement:

1. Name of the customer.

2. Account Number.
3. Payment or Deposit made to the bank within the stated period.
4. Withdrawal effected within the same period.
5. Bank charges for its services.
6. Balance for the stated period.
7. The address of the customer
8. Interest on deposit.
9. VAT and other types of taxes or commissions deducted.
10. Other Banking Services.
11. Overdrafts.
An overdraft is the amount of money which a commercial bank allows a customer to withdraw
over and above the amount he has in his current account. An overdraft does not always need a
guarantor, surety or security. A good and well-kept current account by a customer will enable the
bank grant an overdraft.

Loans: A loan is a fixed sum of money which a customer borrows from a commercial bank. A
bank loan requires sureties, guarantors or some security.

Traveler’s Cheque: A Traveler’s cheque is a document issued by banks on payment of local

currency and which is acceptable international currency. When a Nigerian commercial bank
issues the cheque to Travelers in exchange for the amount paid in Naira, it charges a commission
for the service.

Electronic-Banking(E-Banking)
E-Banking is an electronic banking system which enables banks to provide banking services to
customers that are less tension filled. With e-banking services, a customer can withdraw money
from his account at any branch of his bank in Nigeria. Anyone can also deposit money into the
same account at any branch of the bank. Essentially Electronic-Banking has provided the
following
facilities:

1. An opportunity for a customer to deposit money into his account at any branch of his bank.
2. Similarly, withdrawal of money can also be done at any branch.
3. A customer can make an online check of his account balance and can equally transfer money
from one account to the other.
4. A customer can use Automated Teller Machine (ATM) to withdraw cash from his account on
any day and at any time of the day.
5. There is a reduction of time in clearinghouse at inter-bank clearing houses.
6. Businessmen no longer have to carry cash about when going on business trip.
7. They only need to deposit the money in the bank and at the completion of their purchases,
they go to the bank to withdraw money and make payments for the wares purchased. There
are many other facilities associated with e-banking (Automated Telemechanic ATM)
This is a computerized self-service device which enables the holder of a debit card and Personal
Identification Number (PIN) to withdraw cash from his account and access other banking
services. A holder of an ATM can use it to perform the following banking activities:

1. Make fund transfer into or out of his account.

2. Check his account balances.
3. Make cash withdrawal from his account.
4. Print out mini bank statement of his transactions.
5. Make payment of his bills.

STUDENTS EVALUATION

1. What is meaning of banks.

2. mention types of banks
3. give examples of commercial banks in Nigeria
4. write out the functions of commercial banks in Nigeria
5. define cheque
6. list the reasons for making banks dishonour cheques
7. What is an overdraft.

STUDENTS ASSIGNMENT

1. Another name for producer is —— (a) users (b) wholesalers (c) manufacturer (d)clients
2. __________ sells in bulk (a) retailers (b) wholesalers (c) producers (d) consumers
3. __________ buys in unit (a) retailers (b) producers (c) consumers (d) manufacturer
4. Another name for an end user of a product is ——– (a) a producer (b) a consumer (c) a
wholesaler (d) a retailer.
5. Who gives credit facility to the consumer? (a) a producer (b) a wholesaler (c) a retailer (d) a
consumer.