Current account

Banking

Current Account in Nigeria bank – “What you need to know”

Current Account – Before you go for that class of account for any reason, it becomes pertinent to understand a true dynamic and working principle in good faith.

In the Nigeria banking sector, various types of accounts are suitable for varying purposes, in this case, understanding how they work is a recipe for a good banking experience.

That being said, I will treat this topic as elementary banking which it is, to this end, I will do justice to questions you’ve struggled with.

That being said, let’s get down to business.

What is Current Account?

This is an account that allows the use of cheques to make/effect withdrawal, to as well make payments to others known as third party.

Additionally, certain amount is being charged monthly on this account, usually maintenance fee.

This account is ideal for business, not suitable for anyone who may be wants to earn a fortune on his/her deposit.

Illustration 1.

Assuming Mr. Ibrahim Kasim is a current account holder with say bank “A,” he’s then entitled to a cheque book.

In event whereby he bought goods or goes into business transaction with say Mr. Abbass Tunde, and has a need to pay him, eventually the former had no cash on him, but has money in his bank account.

He may decide to issue a cheque to the later upon mutual consent, to the sum of an agreed sales and purchases made.

Mr. Abbass Tunde now has the responsibility to visit bank “A” on agreed date, present the cheque and all things been equal he’ll get paid on confirmation of Mr. Ibrahim Kasim’s instruction.

Now while that stands, I wish to make you understand certain principles that guide the use and issuance of a cheque.

From the above illustration, at the later paragraph I used the following words:

  • On agreed date
  • On confirmation of Mr. Ibrahim Kasim’s instruction.

There are rules guiding issuance and use of a cheque book/leaf, these include but may not be limited to:

  • Cheque must be dated and should not be stale
  • Cheque must be signed by the issuer/recommended signatory on mandate instruction
  • Every alteration must be signed off accordingly by the issuer
  • The cheque is written in the name of the beneficiary (third party), usually an acceptable ID card inclusive.
  • Additionally, the bank has an obligation to confirm cheque issuance before it makes a payment to the beneficiary.

On a ground where the above have been established, the beneficiary will be paid to the sum of stated amount on the cheque leaf.

Read also: Bank cheque book and its dynamics

so you can understand this topic better.

Who can operate a current account?

This account is operated by individuals, companies and corporate organizations.

That operated by an individual may be referred to a personal current account, it comes with minimal documentation.

While this happens, that operated by companies and corporate organizations is very vast and involves further several documentations, since it’s not aimed at a one man’s business.

Suffix it to say that, this account is ideal for business purposes, if your taste and appetite is to save some idle funds in your account, this may not be ideal for you since it attracts some charges on the go.

You are also limited to withdrawing certain amounts from the account, it as well has credit balance.

Requirements for personal/individual account

  • You need to present a valid and verifiable ID card, which could as well be any of these (Voter’s card, Driver’s License, International passport and National ID card.
  • A utility bill not later than three months/ninety days at the date of application
  • Passport photograph
  • You will have to provide two references from existing account holders of any bank
  • A completed current account opening form

Requirements to open a corporate account

  • Copy of certificate of incorporation
  • MEMART ( Memorandum and Article of Association)
  • Board resolution authorizing that account to be opened
  • Complete signature mandate
  • Passport photograph for each signatory
  • Address verification
  • CAC form Co7 and CAC Form Co2
  • Valid and verifiable means of identification, just as mentioned in individual category above
  • SCUML (Special Control Unit Against Money Laundering)

Additionally, this account could have more than one signatory as the case may be.

Other types of account include:

Savings account

This is an account provided by a bank or financial institution for individuals to save money and earn interest. This account allows for deposit and withdrawal.

Cheque books are not issued for this type of account.

Requirements to open a savings account

  • Valid and verifiable ID card in any of the category mentioned above
  • Passport photograph
  • Copy of recent utility bill
  • KYC (Know Your Customer)
  • A completed account opening package.

Fixed deposit account

This is an investment account where specific amount is invested on an agreed interest rate, over a specified period of time.

By the end of the tenor, the investment could either be rolled over or liquidated.

Read also: Reactivation of dormant bank account

The interest rate here is usually higher than that of savings account.

A fix deposit could be carried out in a savings account.

Domiciliary account

This is a foreign currency denominated savings account, it allows deposits and withdrawals in foreign currency as well international business transactions.

Requirements for Domiciliary account

  • Two reference in place, from current account holders from any bank
  • Duly completed mandate form
  • Passport photograph
  • Utility bill
  • Valid ID card as mentioned above.

Conclusion

This account is different from a savings account in the sense that while a current incurs charges (COT) for operations, savings account earn some interests.

While current uses cheque for withdrawal, savings account uses withdrawal slip.

However, in a situation where this account holder runs out of cheque book, he/she may use a counter-cheque withdrawal, the bank avails this service at a fee.

Additionally, while references are required for the current account opening, savings account does not require reference in place.

Are there questions you wish to ask? Kindly use the comment box.

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