Banking in Nigeria has deep roots. As far back as the early 20th century, native Nigerians had accepted several items as having equal exchange value, such as gun powder, gold dust, etc. also widely accepted legal tenders e.g. cowries and manilas (a curved rod of copper or brass). In this post, we will be looking t the history of the banking system in Nigeria; history and types.
Commercial banking started in Nigeria in 1872 with the establishment of the African Banking Corporation. It distributed the Bank of England notes for the British treasury. The First Bank of Nigeria, then the Bank of British West Africa, was set up in 1894 followed by the Barclays Bank, DCO in 1917 (now known as Union Bank of Nigeria).
They quickly met a Waterloo as problems such as inadequate capital, mismanagement, over-trading, lack of regulation and unfair competition from the foreign-owned banks, saw 21 out of 24 of the indigenous banks established during that period up to 1954, folding up. Nigeria a country still under the leadership of the colonial masters saw its first banking crisis and the citizens suffered untold hardship. Many businesses folded up. A semblance of normalcy seemed to return with the Banking Ordinance of 1952, the establishment of the Central Bank in 1959, and the Banking Decree of 1969 and the banking system in Nigeria started to stabilize with regulation.
As a complex whole, the Nigerian banking system comprises several components and each part performs functions which distinguish it from the other components. For instance, the Central Bank of Nigeria (CBN) performs regulatory functions as the central monetary authority while commercial banks are known for a broad range of functions including – but not limited to –acceptance of deposits and provision of credit facilities.
Central Bank of Nigeria (CBN)
The CBN is the central monetary authority in Nigeria as well as the sole issuer of legal tender in the country. It was created in 1958 as a result of the need to make up for the banking deficiency of WACB (West African Currency Board) and foster the development of the capital market as well as the money market at large. It is worthy of note that WACB had been operating prior to the establishment of the Central Bank of Nigeria. Established in 1912, WACB (West African Currency Board) served as the issuer of legal tender in Nigeria before the CBN was set up few years to Nigeria’s independence.
They are probably the types of banks that the majority of us are familiar with in Nigeria. Most of the public saving and current accounts are held at a retail bank. Retail banks focus more on the public as its main customers. Services offered by a retail bank includes – Current account, Savings account, Credit Card, Debit Cards, Prepaid Cards, offer loans.
They are types of banks in Nigeria that focus on business customers. The main aim of this type of financial institution is to provide financial services to other businesses. Such services provided may include providing a line of credit to businesses in other to manage cash flow, and sometimes provide overdraft for viable businesses.
A financial institution licensed by CBN to provide microfinance services to the public. They also provide such services as savings, loans, funds transfers and many more.
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