COMMERCIAL LAW: BARR WILSON NNEJI 22/6/20
DEFINITIONS OF BANKING, BANKER AND BANKING BUISNESS
Like most subjects of law, there is no generally accepted definition of terms.
According to H.L.A Hart, a banker is a person or company, carrying on the
business of receiving moneisand collecting drafts for customers subject to the
obligations of honouring checks drawn upon them from time to time by the
customers to the extent of the amounts available in their current account.
According to Kinlay; a bank is an establishment which makes to individuals such
advances of money as may be recquired and simply made and to which
individuals entrust money when not needed by them for use.
According to Horace in Bank and Banking; a bank is a manufacturer of credit and a
machine for facilitating exchanges.
The court has similarly tried to give other definitions to bank and banking
business. It is important to note that the English c.o.a in the case of UNITED
DOMINION TRUST LTD V. KIRKWOOD 1966 2 Q.B 431. In this case, the English
c.o.a identified some distinct features or characteristics of banks and what you
can refer to abank as. According to the eng.c.o.a, in the above case some features
of a bank include
1. A bank is an establishment or company that accepts money. The
acceptance of money from and collection of cheques for customers.
2. A bank honourscheques drawn by customers.
3. Keeping of current accounts an entering of debits and credits.
Also in the case of OJIKUT V. AGBOMAGBE BANK LTD 1966 ALL N.L.R 533, the
judge Alexander J. drew a distinction between banking business and money-
lending business. According to the judge, money-lending includes every person
whose business is money-lending excluding any person; bonafide carrion the
business of banking. A modern bank is like a typical conglomerate having its
fingers on every class of banking financing. It has diversified into complementary
areas such as: merchant banking, investment credit and insurance. It may rightly
be called a departmental store of financing. Here in Nigeria, the banks and other
financial institutions act 1991 (BOFIA) states that banking business means the
receiving of deposits on current accounts, savings accounts or other similar
accounts, paying or collecting cheques drawn by or paid in by customers,
provisions of financial or such other business as the governor or any of the
governors of the central bank may by order publish in the gazette designate as
banking business. Sections 1-10 of the BOFIA describes banking or bank.
COMMON FEATURES OR CHARACTERISTICS OF BANK OR BANKING BUSINESS
The following is done by banks or banking businesses;
1. The borrowing of money, raising money or taking of deposits of money. A
bank borrows money, a bank raises money for customers and a bank
collects deposits of money from customers and the public.
2. The lending or advancing of money either upon or without security that is
collateral.
3. The drawing (withdraw), making, accepting, discounting, buying, selling,
collecting and dealing in bills of exchange, promisory notes, cupons, drafts,
bills of lading, warrants, debentures, certificates, scripts, and other
instruments and securities whether transferable, negotiable or not.
4. The granting and issuing of letters of credit, travelers cheques and circular
notes.
5. The buying, selling, and dealing in bullions and species.
6. The buying and selling of foreign exchange including foreign bank notes.
7. The acquiring, holding, issuing on commission, under writing and dealing in
stock, funds, shares, debentures, debenture stock, bonds, obligations,
securities and investment of all kinds.
8. The purchasing and selling of bonds, treasury bills, forms of securities on
behalf of government agencies and others.
9. The negotiation of loans and advances.
10. The receiving of all kinds of bonds, bills, scripts or valuables on deposit or
for safe custody or otherwise.
11. The providing of safe deposit vaults for custody of the valuables of
customers.
12. The collecting and transmitting of money and securities.
The common thing between all these features is that the bank is an intermediary
between the saving and investment activities of members of the public. The
public consist essentially of two groups;
a) The surplus spenders who spend less than their current income for current
output.
b) The deficit spenders who spend more than their income for current output.
The essential function of the banking institution, is then to link the two types of
economic units. It collects the savings of the surplus spenders and channels them
to the deficit spenders while it simply serves as an intermediary. In the words of
Harry G. Brown, infact, it is not really the banks which lend except in name. the
banks are intermediaries. They bring borrowers and lenders together, and the
lenders are the bank depositors, all the borrowers are then the debtors through
the bank as intermediaries of all the depositors.
HISTORICAL EVOLUTION OF BANKING
