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What are the differences between banking and non-banking financial institutions?

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Differences between banks and non-bank financial institution include;

  • Banks operate current accounts while non-bank financial institutions do not operate current accounts.
  • Banks are controlled by the CBK while non-bank financial institutions are not controlled by CBK.
  • Banks issue cheque books while non-bank financial institutions are not allowed to issue cheque books.
  • Banks are formed to offer a wide range of financial services while non-bank financial institutions are formed to offer specific services in which they were formed for.
  • Banks are usually offer short term loans while non-bank financial institutions are designed to offer medium and long term loans.
  • Banks must open accounts with the central bank while non-bank financial institutions must open accounts with commercial banks.
  • Banks provide forex services while non-bank financial institutions do not deal in forex.
  • Banks members of clearing house while non-bank financial institutions does not take part in clearing house.
  • Banks are involved in credit creation while non-bank financial institutions are not involved in credit creation.
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