Banking refers to all the activities carried out financial institutions involving money.this financial institutions include:central bank,commercial banks and non banking financial institutions e.g. industrial and commercial development corporation(I.C.D.C). Some important terms in banking.
- Bank statements: This is a list of all transactions made the bank with or on behalf of the customers of the account holder. It is issued at the end of each month to current account holders. It enlists all deposits made the account holder, all cheques paid the bank out of his account holder, all cheques paid the bank out of his account and any charges made the bank.
- Credit transfers: This is the process where an account holder draws a cheque carrying a wholesome amount to be paid to various people and attaches it to a list of names of the people to be paid. The cheques and the list are presented to the bank and the bank takes up the responsibility of transferring payments to payees who must be account holders.
- Standing orders:its an arrangement between the account holder and his bank to pay a specific amount to a named party at a regular or specific intervals for a given period of time until the agreement is cancelled the drawer. The system serves best in payment of salaries, rent and rates insurances. A fee is charged the bank for these services.
- Travelerscheque: Issued to a person after paying for them in advance they are in fixed denominations. It is important to businessmen always on transit.
- Credit cards: mainly issued banks. It gives authority to the holder to buy goods and services up to an agreed amount. The selling party then presents the card to the issuing organization for payment.
- Cheque guaranteed card:its issued banks to reliable current accounts. The guarantee card if attached to a personal cheque it guarantees payment against the personal cheque. In other wards it cannot be dishonored.
- Clearing house: it’s a central place where different banks meets to settle amounts that become payable to each other as a result of their clients transactions. The transfer of payments is done the central bank since it holds all commercial banks accounts.
There are various categories of banks ie
1.COMMERCIAL BANKS-they are financial institutions that carry out commercial services,accept deposits from the public and advance loans.they are formed with the aim of making profit hence are trading businesses like any other.