The Origin Of Banking System In Nigeria

The Origin Of Banking System In Nigeria

Introduction

According to the Bills of exchange Act of 1882 in the united Kingdom, a bank is described thus: “ a body of persons whether incorporated or not who carries on the business of banking. Traditionally a bank is also defined as a corporate entity which holds itself out to receive from the public deposits repayable on demand by means of a cheque. But I defined banks as a place where money and other valuables are kept for safe until when they are needed.

        Charley (1974) explained that a person who carries on the business of is called a banker and his business premises is a bank. Therefore, banking is the business of operating a bank.

        With the advent of the limited liability company, however, the term bank has come to be used to describe a company which carries on a banking bank business and the terms bankers and bank have become in practice interchangeable and it would perhaps be regarded as pedantic to insist on keeping the separate meaning.

The origin of the banking system in Nigeria

Long before modern banking came  to be in Nigeria, the practice of banking in ancient times was associated with people in ancient Rome and Greece who were engaged in keeping precious metals like gold and other valuables in trust for others. However, the record has it that the idea of modern banking was first initiated and carried out by Italian goldsmiths. Many people having gold chose to keep them with goldsmiths who in turn charge fees on it (deposit regularly)  and for which depositor is given documents in the form of receipts. From the observation by the. Goldsmiths that not all those who kept gold with them came to take them early enough, they started lending out such gold to people for a short time and charged interest as applicable. The activities of these goldsmiths became very profitable and enjoyed patronage. Resulting in the spread all over neighboring nation-states. The practice of banking in its refined form later spread to and took root in many European countries especially in England.

        With specific reference to Nigeria, banking began in 1892 when the then Africa banking corporation located in South Africa started a branch in Lagos. This branch was later acquired by the elder dempster lines in 1894. After the transfer of ownership, the bank was reorganized into what was called the bank of British West Africa (BBWA) which eventually metamorphosed into what is now known as first bank plc.

        The next successful bank to be established after this was the Barclays bank is now known as union bank plc one common feature of this bank was that they were set to provide banking services for the colonial administration in West Africa and their business interests.

        The first attempt at staring indigenous banking was the establishment of the industrial and commercial bank in 1929 followed by the ever not successful. The experiment of Nigerian businessmen as it concerns the discriminatory service characteristic led to a more concerted effort by Nigerians to establish their  own bank to serve and protect their business in