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Question

Difficulty: MediumNon-Bank Financial Institutions and Traditional Financial Systems

Unlike commercial banks, primary mortgage institutions in Nigeria are legally restricted from operating demand deposits and providing cheque-clearing facilities for their retail customers.

Answer: Answer

Answer

True
Primary Mortgage Institutions are specialized non-bank financial intermediaries meant for real estate and housing finance; regulations strictly bar them from offering demand deposit current accounts or operating cheque-clearing services.

Step-by-Step Solution

1
Examine the scope of operations defined for non-bank financial institutions such as Primary Mortgage Institutions.
Primary Mortgage Institutions focus strictly on mortgage loans and housing savings schemes.
Non-bank financial institutions operate under specialized mandates distinct from general commercial banking.
2
Assess whether demand deposit creation and cheque clearing fall within their statutory powers.
Demand deposits and cheque clearing are exclusive privileges of licensed commercial banks.
Financial regulations forbid non-bank financial intermediaries from accepting current/chequing accounts to preserve monetary policy control.

Key Concept

Operational boundaries and regulatory restrictions of Non-Bank Financial Institutions
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Topics

Non-Bank Financial Institutions and Traditional Financial Systems