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Glossary of Important Terms

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Automated Teller Machines (ATMs) Automated teller machines (ATMs) are electronic devices employed to withdraw funds automatically without the need to complete withdrawal documentations. ATM works through an electronic system where an account holder is assigned specific code and identity that ensures access to the account for withdrawal by the account holder. One of the advantages of ATM is that it can be installed at any location outside the bank office, especially in super markets and other public places, ensuring withdrawal of funds at any time for immediate use without recourse to the bank that holds the accounts. In such environment, security of the machines is important so also is constant supply of electricity to power the machines.
Cheque: Defined in Section 73 of the Nigerian Bills of Exchange Ordinance 1958 as "a bill of exchange drawn on a banker and payable on demand".
Clearing: A process in which banks meet on banking days at specified hours to exchange payment instruments, particularly drafts and cheques. The designated centre where this is done is known as a clearing house.
Credit Transfers: Credit transfers are non-cash payments, in paper or electronic form used for both non-recurring and recurring payments. A variant of this is the standing order arrangement in which a bank effects necessary credit transfer on a regular basis to a specific customer for a specified amount. For corporate customers, this is referred to as direct credit arrangement and is used mostly for payment of wages and salaries of employees. Another variant is the electronic credit transfer for time critical and high-value payments.
Currency: The component of the money supply consisting of bank notes and coins.
Draft: A debt instrument drawn by a bank on itself. It is issued at the request of a customer who wishes to transfer money from his account to that of another person or for cash payable at another location.
Electronic Funds Transfer (EFT) Another important component of the payments system, especially in the developed countries, is the electronic funds transfer. It involves the use of computers to transfer large sums of money. The efficient operation of this mode of payment depends critically on the reliability of telecommunications and electricity supply.
Payment Cards: Payment cards consist of credit cards - which indicate that the holder has been granted a line of credit by the card issuing bank; debit cards- which enable the holder to have access to his bank account; and pre-paid cards - which incorporate a computer chip / integrated circuit on which value is loaded, either from the card holder's bank account or in return for cash; while value is then removed from the card as purchases are made, using special point of sale terminals.

Standing Order:


 An instruction in writing, given by a current account holder to his banker to make periodic payments.

Facts : 1/1/1995
National Clearing System Re-Visited:In January 1995, a revised clearing rule became operational to facilitate effective clearing of financial instruments and shorten the period of clearing. Consequently, inter-state cheque clearing time was reduced from 21 days to 15 days, while intra-state clearing has been reduced from 12 days to 9 days.
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