{"id":2513,"date":"2023-10-03T08:25:58","date_gmt":"2023-10-03T08:25:58","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=2513"},"modified":"2023-10-03T08:28:29","modified_gmt":"2023-10-03T08:28:29","slug":"week-6-ss1-third-term-commerce-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-6-ss1-third-term-commerce-notes\/","title":{"rendered":"Week 6 – SS1 Third Term Commerce Notes"},"content":{"rendered":"

WEEK 6 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Date:\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026
\n<\/strong>TOPIC: \u00a0\u00a0\u00a0\u00a0COMMERCIAL BANKS
\n<\/strong>CONTENTS
\n<\/strong>\u00a0\u00a0\u00a0\u00a01.\u00a0\u00a0\u00a0\u00a0Definition and features of commercial banks
\n\u00a0\u00a0\u00a0\u00a02.\u00a0\u00a0\u00a0\u00a0Functions of Commercial banks
\n\u00a0\u00a0\u00a0\u00a03.\u00a0\u00a0\u00a0\u00a0Types of bank accounts and their features
\n\u00a0\u00a0\u00a0\u00a04.\u00a0\u00a0\u00a0\u00a0Procedures for collecting advances from banks etc
\nCOMMERCIAL BANKS
\n<\/strong>A commercial bank is a financial institution which accept deposits and other valuables from the public for safe-keeping lend money to people and firms and perform other auxiliary services with the sole aim of making profit.
\nA commercial bank is owned by private individual organizations or government. It is a limited liability company.<\/p>\n

\u00a0
\n\u00a0CHARACTERISTICS OF COMMERCIAL BANKS
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0They are limited liability companies
\n2.\u00a0\u00a0\u00a0\u00a0They are established and owned by individuals, organizations or governments.
\n3.\u00a0\u00a0\u00a0\u00a0The motive for its establishment is profit making
\n4.\u00a0\u00a0\u00a0\u00a0Commercial banks are incorporated under CAMA (1990)
\n5.\u00a0\u00a0\u00a0\u00a0They transact business with private individuals organizations and governments
\n6.\u00a0\u00a0\u00a0\u00a0They are members of the money market
\nFUNCTIONS OF COMMERCIAL BANKS
\n<\/strong>a.\u00a0\u00a0\u00a0\u00a0Accepting deposits from customers
\nb.\u00a0\u00a0\u00a0\u00a0Lending to customers – .i.e. they grant loans and overdrafts to their customers
\nc.\u00a0\u00a0\u00a0\u00a0Acting as an agent for payment
\nd.\u00a0\u00a0\u00a0\u00a0Discounting bills of exchange
\ne.\u00a0\u00a0\u00a0\u00a0Safekeeping of valuables e.g. wills, jewelleries, certificates etc.
\nf.\u00a0\u00a0\u00a0\u00a0Offering advise to customers
\ng.\u00a0\u00a0\u00a0\u00a0Acting as executors or trustees
\nh.\u00a0\u00a0\u00a0\u00a0Acting as referees\/granting of performance bonds
\ni.\u00a0\u00a0\u00a0\u00a0Issuing, buying and selling of securities e.g. shares
\nj.\u00a0\u00a0\u00a0\u00a0Issuing of letter of credit
\nk.\u00a0\u00a0\u00a0\u00a0Acceptance and discounting of bills of exchange
\nl.\u00a0\u00a0\u00a0\u00a0Buying and selling of foreign currencies
\nm.\u00a0\u00a0\u00a0\u00a0Funds transfers e.g. credit transfer services
\nn.\u00a0\u00a0\u00a0\u00a0Lending money to importers and exporters
\no.\u00a0\u00a0\u00a0\u00a0Issuance of travelers cheques
\np.\u00a0\u00a0\u00a0\u00a0Acting as agents to both importers and exporters.
\nq.\u00a0\u00a0\u00a0\u00a0Transfer and handling of vitals business documents
\nTYPES OF BANK ACCOUNTS
\n<\/strong>There are three types of accounts which customers can open in a bank. These are:
\n1.\u00a0\u00a0\u00a0\u00a0Current Account:<\/strong> This is an account on which cheques are drawn. It is also called Demand Deposit.
\nFeatures of Current Account.
\n<\/strong>a.\u00a0\u00a0\u00a0\u00a0Money can be withdrawn at anytime without notice to the bank.
\nb.\u00a0\u00a0\u00a0\u00a0Money can be withdrawn as many times as possible in a month.
\nc.\u00a0\u00a0\u00a0\u00a0Withdrawals are made through cheques
\nd.\u00a0\u00a0\u00a0\u00a0Deposits are made through pay in \u2013 slip or tellers.
\ne.\u00a0\u00a0\u00a0\u00a0The bank issue bank statement (statement of account) periodically to the customer.
\nf.\u00a0\u00a0\u00a0\u00a0No interest is paid to current account holder
\ng.\u00a0\u00a0\u00a0\u00a0The bank charges some commission for services rendered to customers. This is called commission on turnover (COT).<\/strong>
\n\th.\u00a0\u00a0\u00a0\u00a0Other people can withdraw money from the account on behalf of the customers.
\n2.\u00a0\u00a0\u00a0\u00a0Saving Account: – <\/strong>This account is opened by low income earners who are small savers.
\nFeatures of Saving Accounts
\n<\/strong>a.\u00a0\u00a0\u00a0\u00a0Money can only be withdrawn occasionally
\nb.\u00a0\u00a0\u00a0\u00a0The bank pays interest to the account holder
\nc.\u00a0\u00a0\u00a0\u00a0Holders are issued with pass books
\nd.\u00a0\u00a0\u00a0\u00a0Only the account holder can withdrawn from the account
\n3.\u00a0\u00a0\u00a0\u00a0Fixed Deposit Account (Time Deposits):- <\/strong>Here, money is saved in the bank for a specific period of time to earn interest. Holders are entitled to higher interest than savings account. The bank issues a receipt or deposits account passbook and also pays interest to the owners. The bank must be given between seven to fourteen days notice before money can be withdrawn.
\nPROCEDURES FOR OPENING A CURRENT ACCOUNT
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0The customer will collect and fill an application form.
\n2.\u00a0\u00a0\u00a0\u00a0Two referees, who are customers of banks must be provided to recommend the applicant.
\n3.\u00a0\u00a0\u00a0\u00a0Two referees, who are customers of banks must be provided to recommend the applicant.
\n4.\u00a0\u00a0\u00a0\u00a0The customer will submit his complete particulars (information) to the bank showing his personal details \u2013 this is to enable the bank to authenticate his identity.
\n5.\u00a0\u00a0\u00a0\u00a0The bank will issue him with a pay \u2013 in \u2013 slip booklet.
\n6.\u00a0\u00a0\u00a0\u00a0He will be issued an account number.
\n7.\u00a0\u00a0\u00a0\u00a0He will pay in an initial deposits
\n8.\u00a0\u00a0\u00a0\u00a0A cheque book will be given to him
\nBANK ADVANCES (COMMERCIAL BANKS CREDIT FACILITIES)<\/strong>
\n\tBank advances may be made by way of
\na.\u00a0\u00a0\u00a0\u00a0Loans
\nb.\u00a0\u00a0\u00a0\u00a0Overdrafts
\nc.\u00a0\u00a0\u00a0\u00a0Discounting of bills of exchange
\nIn the above instances, a bank will usually advances the money only against security or collateral.
\nCHARACTERISTICS OF A GOOD BANKING SECURITY
\n<\/strong>The security deposited by a customer to cover a bankers advances should be
\na.\u00a0\u00a0\u00a0\u00a0Durable
\nb.\u00a0\u00a0\u00a0\u00a0Transferable with little expenses and inconveniencies i.e. readily saleable
\nc.\u00a0\u00a0\u00a0\u00a0Capable of easy and accurate valuation
\nd.\u00a0\u00a0\u00a0\u00a0Easily realizable i.e. easy to convert to cash.
\ne.\u00a0\u00a0\u00a0\u00a0Sate in value
\nf.\u00a0\u00a0\u00a0\u00a0Has a value that is greater than the value of the loan
\ng.\u00a0\u00a0\u00a0\u00a0Free from any legal claims by other parties.
\nTYPES OF SECURITIES TAKEN BY BANKERS
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Stock and Shares \u2013 e.g. ‘gilt edged’ and blue chip’ securities.
\n2.\u00a0\u00a0\u00a0\u00a0Land Buildings
\n3.\u00a0\u00a0\u00a0\u00a0Life Assurance Policies
\n4.\u00a0\u00a0\u00a0\u00a0Documents of titles to goods e.g. bill of lading
\n5.\u00a0\u00a0\u00a0\u00a0Guarantees
\n6.\u00a0\u00a0\u00a0\u00a0Indemnity
\n7.\u00a0\u00a0\u00a0\u00a0Deposit Account\/Cash collaterals
\n8.\u00a0\u00a0\u00a0\u00a0Fixed and floating changes on assets of the business.
\nFactors that a bank manager consider before granting loans or advances to customers.
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0The amount of the loan
\n2.\u00a0\u00a0\u00a0\u00a0The type of account the customer operates
\n3.\u00a0\u00a0\u00a0\u00a0The past financial dealings of the customer with the bank
\n4.\u00a0\u00a0\u00a0\u00a0The purpose for which the loan is required
\n5.\u00a0\u00a0\u00a0\u00a0The collateral security offered by the customer
\n6.\u00a0\u00a0\u00a0\u00a0The period or tenor of the loan
\n7.\u00a0\u00a0\u00a0\u00a0Government policy on bank lending
\n8.\u00a0\u00a0\u00a0\u00a0The ability repay\/viability of the project
\n9.\u00a0\u00a0\u00a0\u00a0The financial reports (accounts) of the customer.
\nDIFFERENCE BETWEEN LOAN AND OVERDRAFT <\/p>\n

\n\n\n\n\n\n\n\n\n\n
\u00a0<\/td>\n\u00a0<\/td>\nLoan<\/strong>\u00a0<\/td>\nOverdraft<\/strong>\u00a0<\/td>\n<\/tr>\n
1.\u00a0<\/td>\nTenor (Durations)\u00a0<\/td>\nLong term\/medium \u00a0<\/td>\nShort \u2013 term\u00a0<\/td>\n<\/tr>\n
2.\u00a0<\/td>\nRepayment \u00a0<\/td>\nInstalmentally as per agreement \u00a0<\/td>\nRepayable on demand\u00a0<\/td>\n<\/tr>\n
3.\u00a0<\/td>\nType of Account \u00a0<\/td>\nLoan Account \u00a0<\/td>\nCurrent Account \u00a0<\/td>\n<\/tr>\n
4.\u00a0<\/td>\nBalance \u00a0<\/td>\nRelatively stable and always a debit balance\u00a0<\/td>\nFluctuating; may swings from debit to credit and vice \u2013 versa <\/td>\n<\/tr>\n
5.\u00a0<\/td>\nInterest charged by the bank \u00a0<\/td>\nOn the full amount of the loan \u00a0<\/td>\nOnly on that part of the overdraft facility utilized by the customer.\u00a0<\/td>\n<\/tr>\n
6.\u00a0<\/td>\nAvailability \u00a0<\/td>\nTo any type of account \u00a0<\/td>\nOnly to customers having current accounts.\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

<\/strong>
\n\u00a0REVIEW QUESTIONS
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Describe five ways by which commercial banks aid foreign trade.
\n2.\u00a0\u00a0\u00a0\u00a0Describe to Kola, a new recruit in your office, the steps he may take to open a current account.
\n3.\u00a0\u00a0\u00a0\u00a0Explain any six factors whish a bank manager would take unto consideration in evaluating an application for a loan.
\nWEEKEND ASSIGNMENT
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0If a customer is allowed N1000 overdraft and he receives a bank statement showing an overdraft of N100. This means that he (a) Cannot draw more cheques (b) Is owed N100 by the bank (c) Owes the bank at least N900 (d) Owes the bank N100 only.
\n2.\u00a0\u00a0\u00a0\u00a0Which of the following is a loan, carrying a fixed rate of interest and secured on the assets of a company (a) Mortgage debenture (b) Naked debentures (c) Preference shares (d) Deferred shares
\n3.\u00a0\u00a0\u00a0\u00a0To a commercial bank deposits are (a) Liabilities (b) Assets (c) Capital (d) Cash at hand
\n4.\u00a0\u00a0\u00a0\u00a0Discounting a bill of exchange means the bill is (a) Cashed over the counter (b) Sold on the stock exchange (c) Bought for less than its face value (d) Sold to the highest bidder
\n5.\u00a0\u00a0\u00a0\u00a0Banks issue cheque books to customers holding_________ account (a) Deposit (b) Fixed deposit (c) Current (d) Savings
\nTHEORY
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0State two features of savings account
\n2.\u00a0\u00a0\u00a0\u00a0Mention three collateral securities acceptable to banks o secure an advance
\nREADING ASSIGNMENT
\n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Essential Commerce for SSS by O. A Longe Page 80 \u2013 86
\n2.\u00a0\u00a0\u00a0\u00a0Comprehensive Commerce for SSS by J. U. Anyaele Page 180 \u2013 186.
\nGENERAL EVALUATION QUESTIONS
\n<\/strong><\/p>\n

    \n
  1. \n
    Explain five reasons why tariffs are imposed on imports\n<\/div>\n<\/li>\n<\/ol>\n
      \n
    1. \n
      State five functions performed by the Customs Authorities\n<\/div>\n<\/li>\n
    2. \n
      Give six reasons why manufacturers pre-package their products\n<\/div>\n<\/li>\n
    3. \n
      Explain five factors that adversely affect the growth of Commerce in West Africa\n<\/div>\n<\/li>\n
    4. \n
      Mention and explain five ways by which the Central Bank regulates the activities of commercial banks\n<\/div>\n<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

      WEEK 6 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Date:\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026\u2026 TOPIC: \u00a0\u00a0\u00a0\u00a0COMMERCIAL BANKS CONTENTS \u00a0\u00a0\u00a0\u00a01.\u00a0\u00a0\u00a0\u00a0Definition and features of commercial banks \u00a0\u00a0\u00a0\u00a02.\u00a0\u00a0\u00a0\u00a0Functions of…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,211],"tags":[],"class_list":["post-2513","post","type-post","status-publish","format-standard","hentry","category-posts","category-third-term-ss1-commerce"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=2513"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2513\/revisions"}],"predecessor-version":[{"id":2514,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2513\/revisions\/2514"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}