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Registers - Finance

Mr. Johnson has a savings account at WEMA bank. At the end of every month, he goes to the bank to deposit a sum of money out of his salary. He rarely makes any withdrawal because of his plan to take a loan from the bank when his balance has reached a certain amount by which time he would be considered creditworthy.

Yesterday, Mr. Johnson made his intention known to the bank manager who promptly asked one of the book-keepers to check this customer’s balance in a ledger. The manager was informed that Mr. Johnson has two thousand Naira in his account. And that included the interest he had earned on his savings which has just been credited to him. The manager explained to him that he would need collateral security in form of private property that would guarantee the payment of the loan. This, the manager explained, was a sort of mortgage which can be claimed by the bank in the event of default or failure to failure to repay the loan if granted. In any case, a current account holder may find it easier to get a loan from a bank than a savings account holder. This is because unlike a savings account holder who is oonly a bank creditior, the current account holder is a bank customer who can be easily traced through his guarantors. Apart from this, a current account holder can overdraw his account up to a certain amount. Such overdraft put his account in the reef because he has withdrawn more than his credit balance. Thanking the bank manager, Mr. Johnson promised to call again, saying that much light has been shed on banking operations.

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