Revealed in this piece are hidden facts not known by the populace regarding savings, with the intent of informing the public and help them make better investment decisions beyond the conventional banking practice of savings and withdrawal we all seem to do and think banking is no more than just that. Secondly in this piece are tips to aid in getting bank credits by any customer who intends to, especially the youthful population that find this task almost impossible.
The practice of banking has evolved all over the world, as well as the various products and packages offered by the banks and the variegated nature of services on offer.
Also included are the various investment packages still largely unknown in this part of the world but largely used by the elites of high cadre such as top government functionaries, bankers, public servants and people who can muster enough financial clout in our society.
The concept of banking goes beyond collecting deposits from the public or the safekeeping of valuables for some commission.
One of its principal aims is to mobilize funds from the surplus sectors of the economy and channel same into the deficit sectors of the economy.
This has been very challenging for banks to do due to such factors as armchair banking practices by bankers,fluctuating government regulatory policies,high interest rates,high rate of of non performing loans ,inability to know the bank customer really is even though all bankers use the know your customer slogan or (KYC).
Listed below are some of the various products on offer. A proper evaluation is also done of these services and it is left for the reader to answer such questions as who gains more?
Is the economy being developed? Is savings really worth it? Or is it better to just invest funds in some other sectors to roll it over and so on.
Here any individual who is interested has to walk into the bank to open an account. The banker thereafter furnishes the individual with an account number from which withdrawals will be made as well as deposits made from time to time as the account owner deems fit.
Most customers do not however know that the interest rate on savings is very minimal, less than 10% per annum. It is not fixed for all banks but has little differences charged among the various banks in the country.
When a customer takes a walk into any commercial bank branch in the country,a lot of customers just ignore an electronic board well placed displaying and scrolling some figures such as ,the rate foreign currency is bought and sold (We buy …..,we sell….); and interest rate for savings and time deposits respectively as well as some other related items.
This represents the rate offered by the bank on all their products on offer.lets give a practical example here for better understanding,suppose an individual has some excess funds of say N200,000 and has the option of neither leaving it with the bank while it acquires interest or another decision of putting in into some other investment.
If the individual decides to leave the said sum in the bank for a year,the individual should not expect an interest on not more than N20,000 or lesser if various withdrawals and deposits has been made before the lapse of a year or 12 months.whereas if the same sum is put into some venture other than being saved and it is utilized judiciously,a further 100% can be made on the same sum or even more in some cases.
What this invariably means is putting sums in the bank for savings purpose or for investment is not a good measure of money investment as compare putting it into some profitable venture.The banks also lure customers into making them believe they are doing the customers a favour by collecting deposits from them whereas it is the other way round in practice.
here the customer invest a fixed sum in the bank for a period of time in which case the customer wont have access to the sum or make withdrawals until the expiration of the period in which the amount is fixed for.
A lot of customers think it a better form of investment as well but i will disagree or say it is better in some scenarios but not in all cases.
Reason being the bankers still dictate the interest rate when the said sum is in the region of a few thousands or millions whereas it is not so when the sum runs into hundreds of millions of Naira or billions in practice.Interest rate for fixed deposits is still around 15% but it varies from banks to banks.
We can see from this analysis that this form of savings favours the rich in the society who have all the cash to invest than the low and middle class who have little to invest with.
Lets move to the other aspect of our discuss which is tips to aid any applicant in getting loans from the bank easily and things the banks will look out for before they can grant credits;they include the following;
(1) open a current account with your banker rather than a savings account and ensure it is active with money coming in and out regularly from the account
(2) Ask for specialised customer services from your banker. Here we mean some accounts that require a minimum deposit,a specified amount to be maintained say monthly and in turn some overdraft facilities or loan services that you will have access to when you run that account. All banks in Nigeria have this all bearing different names.
(3) Maintain a good business relationship with your bankers devoid of bad acts like issuing post dated cheques, giving out cheques in excess of what you have in your account and some other vices capable of damaging your credit rating with the bank
(4) Run your account with the bankers for a period of time before making any loan applications
(5) Prepare a cash flow plan on how you intend to put the credit to use,how you intend to payback and be very convincing during presentation and when you are called upon by the bank to defend your proposal.
(6) Get good references or guarantors that will keep the bankers mind at rest due to the personalities involved.
(7) Be very detailed in your feasibility,do proper research and make sure what you have in your feasibility is what is in the society. The bankers become skeptical and apprehensive when they notice facts on ground differ from the facts in the feasibility prepared by the applicant and the chance of the applicant getting the credit becomes reduced.
(8) Get a good collateral especially if the credit required will be on the high side.
Read Also: How to Get a Loan in Nigeria
Finally, every applicant who desires credit from the banks and quickly wants same should follow all the steps highlighted and it will assist tremendously.
All bankers look at 2 other factors,intention to pay & ability to pay.Am sure a lot of people will pick ability to pay as the most important when asked but bankers actually look at intention to pay.
Reason being when you have the intention to pay but no money,you will source the money somehow. On the other hand,an applicant can have the ability to pay but have no intention to do same.
That becomes almost a bad debt in most cases or a case of telling the banker,see the money with me,I have it but I wont give it to you.
Don’t forget that all big businesses all over the world have applied for credit at some point or the other.To all who want apply after this piece,I wish you luck.