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HOW TO SAFEGUARD YOUR MONEY IN BANKS (3)

Registrar/Chief Executive, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uju Ogubunka  says  it is possible for bank customers to safeguard their money in a bank against distress and he explains how this can be achieved.

After You have Deposited Your Money in a Bank, What Should You Do?Registrar/Chief Executive, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uju Ogubunka  says  it is possible for bank customers to safeguard their money in a bank against distress and he explains how this can be achieved.

After You have Deposited Your Money in a Bank, What Should You Do?
It is hard to understand why, when a bank lends money to you, it protects itself in various forms. But when you lend to the bank, you make little, if any, effort to protect yourself. Customs and traditions of banking seem to have made it so? Perhaps, because of the high integrity of the banker whose word is said to be his bond?

Nevertheless, the realization that a banker’s word to repay your deposit on demand may not always stand, especially when distress strikes,necessitates that you seek for pragmatic ways to safe_guard your money, even if you do not have to request for collateral from your bank.

What do we deduce from the foregoing discussion? That depositing money in a bank for safekeeping is in reality a big risk. The money may at times not be safe. Since this situation exists, the dream or wish that the money should not be lost imposes responsibility not only on the custodian (i.e. the bank) but also on the depositor. Rationally, it should be the responsibility of the depositor to ensure that his objective for keeping the money in a bank (safety) is achieved. This is common sense, meaning that the depositor should continuously seek for ways to safeguard his money.    |

The question, which commends itself at this juncture is, how do you, the depositor continuously ensure the safety of your deposit in a bank? Put it another way, how do you ensure that the risk of loss of your deposit is either completely removed or greatly reduced?
We earlier stated that a depositor has to manage the risk that his banker may not pay back the money he deposited on demand or as contracted. Risk management in this instance can be described to mean the process by which all the factors that threaten loss of the money are identified, assessed and prevented or controlled. Meaning that the depositor must be able to think through the likely events or occurrences in the bank that can lead to the loss of the money.

Left with the average bank customer, this will be a Herculean task. Indeed, it will mean that majority of them can in reality do nothing about the safety of their money in banks. This is because they lack the information, knowledge, expertise and experience to be able to manage risks in the manner described above.

It is because of the perceived inability of bank depositors to protect themselves that the supervisory and regulatory authorities attempt to protect them through regulations. In the final chapter, we highlight the principles and strategies you can use to manage the risks associated with depositing your money in banks. These principles and strategies, which come in the form of dos and don’ts complement the ones already discussed in this chapter. If you want to succeed in safeguarding your money in banks, you must take the final chapter very seriously.


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