Merchant banks are financial institutions which perform specialised functions, such as acceptance of bills of exchange, issuance of loans for foreign trade transactions, issuance of new shares, and provision of medium and long-term loans. They are sometimes referred to as acceptance houses. In the past, merchant banks were merchants who specialised in trade with particular parts of the world. The first merchant bank in Nigeria was the Nigerian Acceptance Limited (NAL) established in 1966. There are many merchant banks in Nigeria today. These include: ABC Merchant Bank, Merchant Banking Corporation, Merchant Bank of Africa, First City Merchant Bank, Intercontinental Merchant Bank and Ivory Merchant Bank, but they no longer exist…



    Development banks are specialised financial institutions which provide long-term credit or loan to other enterprises for capital projects. They provide loans for projects in the area of agriculture, commerce and industry. Examples of development banks in Nigeria are Nigeria Industrial Development Bank (N.I.D.B.), Nigerian Bank for Commerce and Industry (N.B.C.I) and Nigerian Agricultural and Co-operative Bank (N.A.C.B).   Functions of development banks Provision of fund for capital projects: Development banks provide long-term loans for capital projects in specific areas. Manpower development: They contribute to manpower development by making funds available to manpower training institutes. Implementation of government policies: Development banks also help to implement government policies on industrial, commercial and…



    Bank clearing house is an institution established by member banks to simplify exchanging and obtaining of payments for the cheques that are paid into bank branches throughout the country. The clearing system is used among banks to settle cheques drawn on them. Indebtedness between banks as a result of the differences between the daily totals of cheques exchanged are set off against each other. Final settlement is effected through the banks’ accounts.   Types of clearing house Local clearing house: The local clearing house takes care of clearance of cheques among various banks in the same town. All large towns have their own clearing houses where representatives of the various…



    Central bank is the highest financial institution in a country which carries out the monetary policy of the government. It is the sole authority in the banking industry which acts as banker to the government and the commercial banks. Central bank controls and regulates the supply of money. Most countries have their own central banks, which work closely with the government in order to have means of influencing the credit policy of commercial banks, e.g. Central Bank of Nigeria.   Historical development of central bank in West Africa In West Africa, before independence, the West African Currency Board (W.A.C.B.) was the highest financial institution which performed the functions of the…



    The Bill of Exchange Act defines a cheque as: “A bill of exchange drawn on a banker payable on demand.” In other words, a cheque is an order written by the drawer to a bank to pay on demand a specified sum of money to the person named as payee on the cheque. To complete a cheque, the drawer inserts the name of the payee, the amount he is to be paid in words and figures, date and signature.   Differences between a cheque and a bank note A cheque is an instrument in writing made upon a bank to pay a given sum of money to a named person…

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