Importance of Banking in Nigeria will be discussed in this article. This will also bring to mind the lifelong benefits of banking in Nigeria.
Importance of Banking System in Nigeria
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Banks are financial institutions saddled with the duties of accepting deposits, granting loans, wealth management, mortgages, managing retirement accounts, and other investments.
The banking industry is one key fraction of the economy which keeps people’s assets, invests them, and makes profits from them.
Banks are regulated by the government because of the possibility of losing public trust due to liquidity issues. This article will discuss the importance of banking in Nigeria.
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Importance of Banking in Nigeria
1. Granting loans and credits to businesses
Banking in Nigeria is such that financial institutions give loans and credit to business owners who have collateral. Usually, loans are granted at an interest rate, which is regulated by the government.
This keeps businesses running and makes people who have ideas but without the financial backbone consider entering into business ventures.
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2. Facilitating financial transactions across borders
Within the country or abroad, banking makes it possible for financial transactions to be made smoothly. Deposits can be made in one part of Nigeria and withdrawal has been done in another part of the country.
With banking, it is possible to receive and send money from/to relatives, friends, or business associates overseas. Banking removes physical borders, boundaries, and barriers that could have been in the way of transactions.
3. Developmental roles
This is square-headed by development banks. These banks have the responsibility of funding industrial projects and supporting the agricultural sector with loans to individuals and farmers’ cooperatives.
Development banks are at the pivotal point of promoting enterprises by putting in place measures that will make them thrive.
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4. Granting loans to other sectors of the economy
Aside from loans granted to individuals, banks grant loans to other sectors of the economy such as the agricultural sector, the educational sector, and others.
This shows the interdependence of all the sectors of the Nigerian economy. No sector actually stands on its own in the real sense of it, they all work together for the good of the nation.
5. Foreign exchange control
It is the Central Bank of Nigeria (CBN) that is saddled with this responsibility. Foreign exchange control is important to remove the frictions on the path of international trade and increase the revenue from it.
Over the years, the propensity of international trade to contribute a great deal to infrastructural development is becoming more and more glaring.
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6. Savings and investments are made easy with banking
It takes a lot of discipline to save especially for frivolous people and those who have nurtured a habit of impulse buying.
Banking makes this possible with saving options such as fixed deposits. With this option, a person no longer has to keep a local savings box or what is traditionally called a kolo to save for future purposes or for a rainy day, as they say. Also, investments have been made a lot easier with banking.
There are several investment schemes at the moment, apart from buying shares that are fast becoming archaic and obsolete.
