ANSWERS:
I. CENTRAL BANK
– It is a bank that coordinates and controls the operations of the financial system of the country
– There is only one central bank in each country
– It acts as the government banker
– The central bank is an apex bank
– It makes advances of money to the government and advises the government on monetary matters
– It formulates needed banking regulations to be followed by all other banks
– It issues the arrangements and distribution of currency through the commercial banks
– It maintains accounts for all the other banks in the country
– It acts as a lender of the last resort to the banking system
– It is the banker to the central bank of other countries
– It controls the flow of cash in circulation
II. MORTGAGE BANK
– It is a financial institution established for the acceptance of fixed deposits from members of the public
– It has the aim of encouraging the public members to build their own houses by offering them long term loans
– Mortgage banks could also be called building societies
– They construct and provide houses for the low-income group
– They provide social amenities to the low-income earners
– Members of the public are encouraged by mortgage banks to save their money
III. COMMERCIAL BANKS
– This is a financial institution set up for keeping and lending money to people. It is owned by individuals, organizations or governments for the main purpose of making profits
– Commercial banks accept deposits
– They provide safe custody of other valuables like gold, jewelries, wills, deeds etc.
– They lend money to industrialist, business men and other public members in form of loans and overdraft
– They act as agents of employment to customers
– They provide agency services through standing or banker’s order
– They issue traveler’s cheques
– They provide foreign exchange services
– They discount, purchase and sell bonds, securities etc. on behalf of their customers/brokerage services
– They render credit transfer services
– They act as referees for customers
– They offer advice to customers
– They provide overseas intelligence reports for their customers
IV. CURRENT ACCOUNT
– It is a type of account operated with the use of cheques
– It does not attract interest but charges to the bank for its services
– Money deposited into this account can be withdrawn at any time and as many times as possible in a month.
– Current account holders enjoy overdrafts
– An application is made to the bank to open it
– Referees are the provider to the bank
– Specimen signature card and other forms are completed by a prospective customer
– It is mostly used by businessmen for transactions
– Initial deposit is made
– Account number and cheque book are given
V. SAVINGS ACCOUNT
– Saving account is operated aiming at attracting small deposits from shareholders
– They are operated to encourage savings among customers
– Holders of these accounts enjoy interest from the bank
– Low-income earners, students, etc. always operate this type of account
– Little amount could be used to open this type of account
