Account number: Definition, types, how to check it, cheque book and signatories

Account number is an aspect of banking that cannot be underscored, just like every individual has a unique identity and a finger print, so is a bank account number attached to every bank customer.

What is account number?

An account number is a unique set of numbers, in some cases may consist of letters in which an individual or a company (customer) is being identified, to further enable such customer access into bank account. It’s through the account number that a customer can receive and send money.

The account number houses your funds and makes you eligible to carry out transactions at every given time.

Example of an account number 1

Say an auto spare parts dealer Kevon International has an account with XYZ bank through which he wished to be receiving cash deposit from his customers who buy auto spare parts from him.

Kevon international will make his XYZ bank account number available to his customers through which they can settle for goods being supplied.

In this case, since it’s a company the account name should be “Kevon International” where the account number may be “1234789087.”

Example of account number 2

Say a customer of XYZ bank Mr. Godwin Ibe wants to receive money from his son/relative, it’s expected that he sends his account number to such relative appropriately through which the money can be routed via his account.

His account details may look like,

• Account name: Mr. Godwin Ibe
• Account number: 3026789452

In this case you will notice that the account name here is a real name but not a company name. This is because Mr. Godwin Ibe operates a personal account with the bank and not a checking/company account as the case may be.

Types of account number

Basically in Nigeria, you may either go for a

• Savings/personal account or
• Checking/current/company account

Savings/personal account number

Savings account like it applies is an account where the signatory uses such account for savings purposes. The customer credits and withdraws from such account with ease.

However, such customers are entitled to certain amount as compensation for the deposit known as interest on monthly arrangement.

Why and how do the banks pay such interest?

For the record, the bank makes money from granting loans to businesses at a high interest rate, the next question you may want to ask is “Whose money is the bank granting as loan?”

A fraction of the money you deposited is being granted as loan to businesses who are in need of financing options, such businesses are in return being charged a high interest for such facility, it’s from this interest that the bank pays you a fraction as interest monthly though subject to your deposit amount.

This means to say that the higher your deposit the higher your interest rate monthly.

And most arrangements, some savings accounts are designed to earn even more interest rates subject to number of withdrawals from such account in a month.

Requirements for savings accounts

To open a savings account in any Nigerian bank you are required to meet the below minimum requirements

• Valid ID card which could be (National ID, voter’s card, driver’s license, International passport or any other ID card deem suitable by the bank) some accounts may be opened with incomplete documentation, however, do understand that there are minimum credit balances and thresholds for such accounts.
• You will have to complete a savings account opening form
• You will be required to provide a utility bill not later than 90 days essentially
• Premise verification report will be done on you
• A copy of your recent passport photograph
• You will be required to provide your BVN, where you have not operated an account before you will be profiled for a BVN right in the bank.

How to open a savings account

There’s no rocket science involved in opening a savings account in any Nigerian bank

• Kindly walk into any Nigerian bank of your choice
• Locate the customer service desk
• Enquire to open a savings account
• Be sure to have arrived with necessary documentations like the valid ID card, utility bill, passport photograph and your BVN
• You will be required to complete a savings account form, pay attention to details and complete your form without errors whatsoever.

Note: Ensure to use your name and date of birth as it exactly appear on your ID card, any alteration may pose challenges in linking your BVN to your account thereafter.

Where you do not pay attention to this, you may run into BVN change of name thereafter which is not too ideal.

Thereafter, your account number should be ready almost immediately, though some banks who still depend on their head offices to profile account may take up to 24 to 48 hours.

How to withdraw from a savings account

Withdrawing from a savings account is not a task itself,

• Walk into the banking hall
• Ask to be shown a withdrawal slip
• Complete your withdrawal slip with (your account name, account number, date, amount to be withdrawn both in figure and words, then sign your signature where applicable)
• Join the queue and hand in your withdrawal slip to the cashier when it gets to your turn

The cashier collects the withdrawal slip, study it for correctness and debits your account for withdrawal amount.

Note: Withdrawal may be turned down in a situation where your signature appears irregular, kindly visit the customer service unit to regularize your signature.

Current/checking account

The current account here is the more advance aspect of bank account designed for business men who are into volume transactions.

A downside to current account is that in most cases the bank charges you for preserving your money and facilitating your transactions. You most times pay “Charge on Turn-over” COT.

However, the upside is that you have access to large volume transactions.

For instance, a savings account can only withdraw N500k across the counter daily following the cashless policy, where a checking/company account can withdraw upward of N3m daily.

Where you withdraw above the account threshold, you will be charge in excess of your withdrawal.

The bank actually grants loans to these category of customers who in turn pay back with high interest, wherein you are being paid a fraction as monthly interest in your savings account.

Requirements for a current account

• Valid ID card in the aforesaid arrangement of all directors where applicable
• Utility bill
• Business registration from CAC
• Passport photographs of signatories where applicable
• Minute of board meeting
• Memorandum of association
• TIN
• BVN of directors and signatories

How to open a current account in Nigeria

Walk into any bank of your choice

• Communicate your intention to open a current, checking or company account
• Provide the above listed details
• Complete an account opening form and all signatories and directors sign appropriately at the right spots
• Your account opening process will commence and account number made available in less than 24 to 48 hours.

How to withdraw from a current account

Withdrawing from a current account is different from savings account in the sense that you will need a cheque for your cash withdrawal or a counter cheque for a fee where you do not have your cheque handy.

• Open your check leaf
• Write the name of the beneficiary
• Amount
• Date and
• Signature

The cashier will pay you all things been equal.

There’s this concept of third party withdrawal in practice, this is associated with an arrangement where a signatory issues a cheque to a third party who in turn withdraws from a current account.

Example 3

Say Frankon Holdings who has a company account with bank XYZ wants to pay a third party Mr. Emeka without visiting the bank to complete a withdrawal himself.

Frankon Holding only needs to issue an order through cheque instructing the bank to pay the named bearer to the sum of a written amount on the cheque leaf.

Types of cheque

Kindly note that cheques are usually classified according to the instruction written, etc.

Open cheque: A cheque which two lines are not crossed by default on its surface is called an open cheque. This type of cheque can and be presented and honored by anyone, where  instruction is contained and is being paid across the counter.

Read also: How to use cheque book and dynamics

Crossed cheque: This is a type of cheque where the drawer specifies the payee while making two crossed lines on its surface which could also be on default. A crossed cheque is not paid across the counter rather is paid into the beneficiary’s account.

However, a crossed cheque could only be paid across the counter if it’s being thrown open, by this arrangement such cheque is signed twice between two lines on its surface by the drawer/signatories only.

Post-dated cheque: This is a cheque whose date of payment is still ahead, this type of cheque is usually not honored by the bank, the payee will either wait for the date ahead or contact the drawer.

Stale cheque: A cheque is considered stale after 6 months from the date of issuance, there’s a legal obligation on the part of the bank to dishonor such cheque.

Dishonoring cheque

A cheque is said to be dishonored if the bank on standing protocols refuses to pay the bearer of such cheque. However, when a cheque is dishonored, the bearer may be told in plain terms why such instrument is being dishonored.

A cheque may be dishonored for any of the below reasons,

• If the amount to be paid on the chedque is less than the account balance (Bounce cheque)
• Where the drawer’s signature is irregular, such instrument would be dishonored till the signature is being regularized.
• If the name of the payee is omitted on the cheque
• Where amount in words does not conform with amount in figure
• Where the drawer commands the bank to halt a payment
• Where a law court orders the bank to stop a payment
• Where a cheque is presented on a closed account
• Where the drawer is considered a lunatic or death occurs
• Where there’s no date on the cheque or it goes stale

Signatory and mandate instruction

Signatory

A signatory is an authorized user on an account, who also can sign an instrument to effect withdrawal on such account.

There could be up to 2 or 4 signatories to an account depending on the nature and purpose of such current or company account.

Mandate instruction

A mandate instruction is an instruction contained on the account opening package instructing the bank on how an account should be withdrawn or run.

For example where there are 2 signatories to an account, it’s left for the company or sole account owner to determine who or how many people signs the cheque leaf in a case of withdrawal.

Either to sign

This is a case where any of the signatory could sign a cheque and such cheque will be honored by the bank.

Both to sign

In this arrangement all 2 existing signatories to such account must sign the cheque to effect a withdrawal.

Related terms