Types Of Banks In Nigeria And Their Functions

This article is about the major types of banks that exist in Nigeria today and their functions. While majority of the Nigerian populace are quite conversant with only commercial banks, many of them are unaware that there are other types of banks that are available in the country and they all function differently from one another. Altogether, there are at least 7 types or classes of these financial institutions in the country and we will discuss them going forward.

Types Of Banks In Nigeria And Their Functions


The following is a comprehensive list of the 7 major types of banks in Nigeria and their functions:


The Central Bank of Nigeria (CBN) is the ultimate bank in Nigeria and the regulator of all other banks and banking activities in the country. The CBN is the only financial institution in the country that is empowered to produce and distribute/circulate the Naira, our nation’s currency throughout the federation. The CBN is the lead banking regulator in the country that is charged with the overall control and administration of the monetary and financial sector policies of the Federal Government in Nigeria.

Functions of the Central Bank of Nigeria (CBN) include but are not limited to the following:

  • Ensuring monetary and price stability in the country
  • Issuing legal tender currency (the Naira) throughout Nigeria
  • Maintaining external reserves to safeguard the international value of the legal tender currency;
  • Promoting a sound financial system throughout the federation; and
  • Acting as a bank and providing economic and financial advice to the Federal Government of Nigeria.

The Central Bank of Nigeria (CBN) is also responsible for issuing and granting licenses to banks to carry on the business of banking and supervise banks and other financial institutions. It is empowered to issue guidelines and circulars relating to its responsibility to banks, foreign exchange market, and other financial institutions. If a bank in the country is discovered to be failing, the CBN is mandated to intervene by directing the Nigerian Deposit Insurance Corporation (NDIC) to take over the management and control of the bank.

The Central Bank of Nigeria also develops fiscal initiatives that involve formulating and implementing policies, innovating products, and creating enabling environments for banks and other financial institutions to deliver effective services in a resourceful and sustainable manner.


Commercial banks are the most popular types of bank in Nigeria as virtually everyone in the country does business with these banks in one way or the other, and apart from the Central Bank which is the sole regulator of all other financial institutions, they are the biggest banks in the country as well. Commercial banks in Nigeria are profit-making financial institutions that carry out all operations involving the deposit and withdrawal of money for the general public.

They also provide loans for investment, and grant loans to businesses. These banks are also into mortgage lending, and basic investment products like savings accounts and time deposits. The two major characteristics of commercial banks are lending and borrowing. These banks receive deposits and gives money to various projects to earn interest/profit.

The following are some of the functions of commercial banks in Nigeria:

  • Provide loans to individuals, businesses and government organisations
  • Accept deposits and money transfers from customers
  • Credit Creation
  • Transfer Funds
  • Issuance of bank statements
  • Trade securities or commodities on behalf of clients
  • Help in foreign exchange transactions
  • Manage assets and liabilities
  • Safekeeping of valuables, etc.

As of 2022, this is the full list of all commercial banks in Nigeria:

  • Access Bank Plc
  • Citibank Nigeria Limited
  • Ecobank Nigeria Plc
  • Fidelity Bank Plc
  • First Bank of Nigeria Limited
  • First City Monument Bank Plc
  • Globus Bank Limited
  • Guaranty Trust Bank Plc
  • Heritage Banking Company Ltd.
  • Key Stone Bank
  • Polaris Bank
  • Providus Bank
  • Stanbic IBTC Bank Ltd.
  • Standard Chartered Bank Nigeria Ltd.
  • Sterling Bank Plc
  • SunTrust Bank Nigeria Limited
  • Titan Trust Bank Ltd
  • Union Bank of Nigeria Plc
  • United Bank For Africa Plc
  • Unity Bank Plc
  • Wema Bank Plc
  • Zenith Bank Plc.


Merchant banks are yet another type or class of banks in Nigeria. These banks are financial institutions in the country that provide underwriting, loan services, financial advising, and fundraising services for large corporations and high net-worth individuals. They are different from commercial banks in that they do not provide financial services to the general public. Merchant banks also provide advisory services on corporate finance issues like the acquisition or sale of a business.

The following are the functions of Merchant Banks in Nigeria:

  • Corporate Counselling
  • Project Counselling
  • Capital Restructuring Services
  • Portfolio Management
  • Issue Management
  • Loan/Credit Syndication
  • Arranging Working Capital Finance
  • Bill Discounting and Acceptance Credit
  • Lease Finance
  • Venture Capital.

Below is a full list of all Merchant Banks in Nigeria this 2022:

  • Coronation Merchant Bank Limited
  • FBN Merchant Bank
  • FSDH Merchant Bank Ltd
  • NOVA Merchant Bank
  • Rand Merchant Bank Nigeria Limited.


Microfinance Banks (MFB) are companies licensed by the Central Bank of Nigeria (CBN) to carry on the business of providing financial services such as savings and deposits, loans, domestic funds transfer and non-financial services to microfinance clients. The target clients for Microfinance Banks include the following group of persons: The economically active poor; low-income households; the un-banked and underserved people, particularly vulnerable groups such as women, youths and the physically challenged; informal sector operators, micro-entrepreneurs and subsistence farmers.

The functions of Microfinance Banks in Nigeria today include the following:

  • Make financial services accessible to a large segment of the potentially productive Nigerian population which would otherwise have little or no access to financial services
  • Provide synergy and mainstreaming of the informal sub-sector into the national financial system
  • Enhance service delivery by microfinance institutions to micro, small and medium entrepreneurs (MSMEs)
  • Contribute to rural transformation by mobilizing savings
  • Promote linkage programme between microfinance institutions (MFIs), Deposit Money Banks (DMBs), Development Finance Institutions (DFIs), specialized Funding institutions
  • Create employment opportunities and increase the productivity and household income of the economically active poor in the country, thus enhancing their standard of living.
  • Promote a platform for microfinance service providers to network, exchange view and share experience.

In order to know how many Microfinance Banks that exist currently in Nigeria, see the list provided for the most up-to-date information.


Mortgage banks are financial institutions in Nigeria that primarily or exclusively offer loans to clients so that these clients can purchase real estate, especially of private residences. Mortgage banks loan their own capital to clients and either collect payments with interest or sell their loans on the secondary market. Other revenue comes from origination fees and similar fees attached to making loans.

Some functions of Mortgage Banks in Nigeria include the following:

  • Perform financial snalysis
  • Perform financial counselling
  • Loan origination.


Cooperative banks are financial companies established on a cooperative basis and belonging to their members. What this means is that the customers of a cooperative bank are also its owners. Cooperative banks provide a wide range of regular banking and financial services. Three types of cooperative banks operating in Nigeria are: primary credit societies, central cooperative banks, and state cooperative banks, and these banks are organized at three levels namely: village or town level, district level and state level.

Functions of Cooperative Banks in Nigeria include the following:

  • Providing loans to small borrowers and small businesses.
  • Extending credit facilities like term loans and working capital loans.
  • Giving advances against shares and debentures.


Non-Interest Banks in Nigeria are banks that operate on defining principles such as: interest prohibition in debt and exchange contracts; the prohibition of uncertainty or speculative behaviour in business transactions; the prohibition of any form of gambling. It also prohibits funding of unethical concerns such as, alcohol, tobacco, ammunition manufacturing and adult entertainment institutions; just to mention a few. Non-Interest Banks engage in partnership contracts, trading contracts, leasing contracts, and other financial services that conform to Islamic commercial jurisprudence. These banks include the following: Jaiz Bank Limited, TAJ Bank Plc, and Lotus Bank Plc.

The Author

Maduawuchi Obialo

Maduawuchi Obialo is the founder of Nigerian Guide and the Editor-in-Chief at Nigerian Infopedia. He is a professional Web Content Developer and a Biochemist.


Add a Comment
  1. Very, very useful 🙂

  2. Abdullahi Mohammed

    Very useful

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