BANKING It is an IMPORTANT aid to trade

BANKING: It is an IMPORTANT aid to trade and commerce

Types Of Bank Central Bank v Is the financial adviser and banker for the government. v Is the banker to the commercial banks. v Issue, control and checks the flow of cash in the country. Commercial Bank v Are profit seeking financial companies that are usually privately owned.

Lending Money v Bank Loan v Bank Overdraft Keeping Money v Saving Ac. v Current Ac. v Fixed Deposit Ac. SERVICES OF COMMERCIAL BANK Help make payments v Cheques v Standing Orders v Direct Debiting v Credit Transfer Provide other services v E-banking

BANK OVERDRAFT BANK LOAN VS. • Long term • Short term • Need to fill in application form • No application form • Everyone can apply • Low rate of interest • Mainly for personal reasons • Only for current account holders • High rate of interest • Suitable for business people

FACTORS TO CONSIDER BEFORE GRANTING LENDING MONEY • Character of the applicant • Purpose of the loan and overdraft • Nature of security • If the project is productive and beneficial

Type Given Rate of interest Withdrawal Saving account Pass book Low Unlimited Current account Cheque Book None Unlimited Fixed deposit account Certificate of acknowledgment High Limited

CHEQUES Open Cheques Crossed Cheques 1. Bearer cheque 1. General Crossing 2. Order cheque 2. Special Crossing

ADVANTAGES DISADVANTAGES • Easy to carry • Post-dated • Cheap • Stale • Proper Record • Drawer is dead, bankrupt and etc • Convenience • Closed his account • Defected or torn

OTHER BANK SERVICES • Telebanking • Bank Giro System (Credit transferred system) • Night Safe Facilities • Safe Deposit Boxes • Automatic Teller Machines (ATM) • E-banking

QUESTIONS 1. List ALL bank loans in lending facilities. 2. List 5 disadvantages of cheques. 3. List ALL other bank services. 4. Name 5 commercial banks you know. 5. What are the functions of central bank?