Different Types of Bank Accounts in Nigeria

Unveiling the Nigerian Banking World: Familiarizing with Types of Accounts

Yes, the banks dominated the Nigerian economy as it kept growing. It is compulsory to have a bank account; hence, types and availability of accounts are convenient. Under this guidebook, there exists the potential to learn about various types of accounts offered, what they are all about, the features they possess, and finally, appropriate customers in the country.

The Major Account Types

Among the most significant Nigerian personal banking accounts are. They all have been formulated to serve a multitude of different financial needs and belong to different strata of society.

1. Current accounts:

Purpose: They have been formulated to manage a mind-boggling amount of cash flow, i.e., depositing, withdrawal, remitting, and issuing checks. It would be ideal for individuals or parties handling humongous amounts of transactions.

What you’ll get:

– Checkbooks: Modes of check payment.

– Debit cards: They enable us to draw money from ATMs and pay traders.

– Internet and phone banking: You can handle money at home.

– Overdrafts (if they agreed): You can lend a bit more when you do not have any money.

– It handles more money flow: It is fitting in making huge money transactions every day.

– You are at liberty to pay charges: Since you receive the best treatment.

For whom

– Working class individuals with maybe good salaries but on-going bills.

– Businessmen can therefore deal at will.

– Cheque holders.

– Overdraft facilities applied for.

Types: Some premises or professions, for example, have some current accounts like student current accounts or premium current accounts which are useful.

2. Savings Accounts

Purpose: These accounts keep your money safe and earns interest automatically; they are really ideal for individuals who want to save money for use in cases of emergencies or for unique objectives in saving.

Features:

-Build up interest: The account builds interest on your balance at lower rates compared to fixed deposit accounts.

-Use with debit card: Withdraw cash from cash machines and spend in shops.

-Online banking and mobile banking: Wherever you are, your account is.

-A Lower control of transactions: In comparison to current accounts.

-Largely low or zero to maintain open: In order to make it accessible to broad sections of the population.

Best suited to whom:

-Future savers.

The few students and young adults as new savers. Their savings shall be restricted by an account. They can, however, spend their cash. People who desire to withdraw money.

-Goal-saving accounts: to save for a particular use such as school fees or holidays.

-Child savings account: kids saving.

-Higher interest savings account: attractive interest on saving more money.

3. Domiciliary Accounts:

Purpose: These accounts hold and repay foreign exchange like US Dollars, British Pounds, and Euros for foreign exchange dealing institutions and individuals.

Features:

-Foreign currency deposit and withdrawal: You have the facility to withdraw and deposit in a foreign currency.

-Remittance and receipt of money from abroad: Money can be received and remitted from abroad.

-Discretionary card spending facility: Foreign money spending through a card is discretionary.

-Compliance with foreign exchange regulation: The accounts are regulated by the Central Bank of Nigeria (CBN) for their operations.

Core beneficiaries:

-Straightforward recipients of foreign remittances through kin or friends.

-Those who have business locally with their counterparty overseas.

-More international visitors.

-Any one who wants to hold more than one currency.

Caveats:

-Exchange rates: Foreign currency becomes stronger or weaker, therefore impacting your holding.

-CBN regulations: There are strict foreign exchange transaction regulations that you are to abide by and report on time.

4. Zero Balance Accounts:

Purpose: They allow those who are of limited means to use the banks more. They have (or zero) virtually no expense to maintain and do not limit the client from having a balance.

Features:

– Zero or very minimal minimum balance: very friendly for one with little money.

– Few transactions: Used to manage risk in check and prudent use of resources.

– Basic banking operations: deposits, withdrawals, and transfers.

– Mainly by mobile banking apps: It depends on technology for customers who are not likely to have access to banks.

Ideal for:

– A person who does not make sufficient amounts of money.

– A person with no means of getting a bank account or very limited access to the same.

– Anybody looking for cheap, no-frills banking.

Impact on Financial Inclusion

These accounts play a very crucial role in introducing more people to banking. These accounts cater to the basic banking requirements of such people who, up till now, could not visit banks.

5. Special Accounts for Enterprises:

Nigerian enterprises need specialist accounts to manage their accounts in a correct manner.

1. Current Corporate Accounts:

Purpose: It is meant for any type of business for their working capital.

Benefits:

– Facility for large business transaction since a lot of transactions are done.

-Sub-packaging chequebook: Would allow a company to pay through cheques.

-Mobile and internet banking facility: Allow money to be spent anywhere, anytime.

-Business debit cards: for spending on behalf of the company.

-Business loans and credit facility (subject to approval).

-Personal account managers: Personalized assistance.

Applicable to:

-All registered businesses such as small shops or big companies.

-Companies that make thousands of transactions.

– Companies require credit facilities.

Documents Required:

You will be required to provide more documents than the ones provided for individual accounts when you open a business checking account. Some of the documents provided are business registration documents, tax identification numbers, and board resolutions by companies.

2. Small Business Accounts:

Purpose: Accounts specifically designed to cater to small and medium-sized businesses that are vital units of Nigeria’s economy.

Its Contents:

-Less fee: Less than corporate checking accounts fees.

-Bundle packages:

It includes business consulting, learning, and networking peers.

-Fewer documentation: Invite small business people to open fewer accounts with.

-Featured small business loans.

Beneficiaries:

-Small and medium businesses.

-New business and venture-starting individuals.

-Small businesses requiring finance to run their business.

Small Business Aid:

It comprises money management and options other than financing with banks on a joint basis with development and government agencies.

3. Sellers’ Accounts:

Purpose: For businesses that accept cash via cards or the internet like card shops and web stores.

Its Content:

-Internet payment setup: Ease of payment over the internet.

-Card-machine facility: Ease of card payment at the shop outlet.

-Transaction history and settlement: Shop transactions in memory.

-Chargeback processing: Clear cut disputed transactions.

Best for:

-Internet stores.

-Restaurants and cafes.

-Shops.

-Any organization that allows electronic payment.

Payment Ecosystem

Merchant accounts are appropriate for Nigerian payment system because it expands with online purchasing and e-commerce.

4. NGO and Non-Profit Planning Special Accounts:

Purpose: Receiving and making money, including donations, through non-profit and non-government agencies.

Functionality:

-Transparency and Accountability: Offers reportability and money traceability.

-Donation Management Tools: Offers processing and receipt of donations.

-Compliance to Regulatory Requirements: Offers compliance of each regulation and rule.

-Lower Rates or Special Charges: It is in view of the not-for-profit mission of the organization.

Applicability:

-Registered NGO and Not For Profit Associations.

-Charitable Foundations.

-Pluralities of Worship.

Documentation: The board resolutions, registration certificates, and supportive documents are normally drawn up when required to open an NGO current account.

6. Special Accounts for Special Needs:

There are also some special accounts of Nigerian banks to serve special banking needs.

1. Diaspora Accounts:

Purpose: To enable easy management of money in such accounts.

Features:

-Open account online: For online money spent/withdrawn.

-Send/receive foreign money: For receive/send send money abroad.

-Invest in Nigeria: Investing in products in Nigeria.

-Pay Nigeria bills: You can remit home bills where you live.

Whom for:

-Nigerians who live abroad.

-For other people who want to invest in Nigeria.

-Ease to people who do not want their money converted elsewhere in Nigeria.

– Direct remittance of money to Nigeria and thus a foreign exchange inflow to the nation.

2. Student Accounts:

Objective: To provide banking at low cost facility to students.

Features

-Low or no maintenance charge: It is a facility provided to such students who might not be in a position to pay a high charge.

-With debit card: You can withdraw from ATMs and buy merchandise from merchants with your debit card.

-With online or mobile banking: You can bank anywhere.

-One-time discount or offer pricing.