Types of Banks – A bank can be defined as a financial institution that provides various financial services, which may include accepting deposits and issuing loans. A bank is also a place where money and other valuables are kept.
This post addresses the different types of banks and their summarised functions
Types of Banks
These are financial institutions that primarily receive savings accounts and pay interest to depositors. Most people are used to this kind of bank because they are customer oriented, and it’s the bank of low income earners.
2. Commercial Banks
A commercial bank is a type of bank that provides services such as accepting deposits, making business loans, and offering basic investment products. Commercial banks are established with an objective to help businessmen. Click here to read more on commercial banks
3. Industrial Banks
Industrial banks sell certificates that are labeled as investment shares and also accept customer deposits. They then invest the proceeds in installment loans for consumers and small businesses. This kind of bank has limited scope of business. The main objective of these banks is to provide long-term loans for expansion and modernisation of industries. Industrial Banks are also referred to as developmental banks.
4. Agricultural Banks
These are banks that lend money to farmers, often over a long period of time and at low rates of interest. They are credit banks specifically established to assist agricultural development
5. Indigenous Banks
Indigenous bankers are private firms or individuals who operate as banks by receiving deposits and giving loans. Indigenous banks are different from professional moneylenders whose primary business is not banking but money lending.
6. Central Bank
This is a national bank that provides financial and banking services for its country’s government and commercial banking system, as well as implementing the government’s monetary policy and issuing currency. Example of a Central Bank is the Central Bank of Nigeria
7. Co-operative Banks
These banks generally give credit facilities to small farmers, salary earners, small-scale industries. They hold deposits, make loans and provide other financial services to cooperatives and member-owned organisations.
8. Exchange Bank
These banks are mainly concerned with financing foreign trade. An example is the Standard Chartered Bank
9. Consumers Banks
These are banks that provide services to individual consumers, rather than to companies, corporations or other banks. The main objective of this bank is to give loans to consumers for purchase of the durable products like cars, etc. The consumers have to repay the loans in easy installments.
10. The World Bank
The World Bank (WB) is an international financial institution that provides loans to developing countries for capital programmes. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).