Grade 10 Business Studies Business and Money Management – Banking (11 Lessons) Notes

A bank is a business that accepts deposits, keeps money safe and lends to individuals, businesses and government. Main functions:

• Accept deposits (savings & current).
• Give loans and advances (credit creation).
• Provide payment services (cheques, ATM, transfers).
• Promote savings and investment.

Why banks matter:

• Mobilise savings and channel them to productive uses (investment).
• Facilitate payments so trade and business work smoothly.
• Support government policies (collect revenue, finance projects).
• Provide credit that helps businesses expand and create jobs.
• Help control inflation and money supply (through Central Bank).

Types: commercial banks, microfinance banks, savings & credit co‑operatives (SACCOs), and digital/mobile banking providers. The Central Bank of Kenya (CBK) regulates and supervises banks to keep the system stable.

Common accounts offered by banks:

• Savings account: Encourages saving; interest is paid; limited monthly withdrawals in some cases.
• Current (cheque) account: For businesses and frequent transactions; usually no or low interest.
• Fixed deposit (term deposit): Money locked for a set time at higher interest.
• Youth/student accounts / Joint accounts: Special features for young people and families.

To open an account you usually need:

• National ID or birth certificate (for minors, parent/guardian ID).
• Proof of address (utility bill or letter).
• Passport photo and initial deposit (if required).
• Banks follow Know-Your-Customer (KYC) rules to prevent fraud and money laundering.

Services banks offer:

• Loans (personal, business, mortgage) — borrowers pay interest.
• Overdrafts — short term borrowing linked to current accounts.
• Debit and credit cards, ATMs, standing orders and direct debits.
• Foreign exchange, trade finance, and savings plans.

Kenya is famous for mobile money (e.g., M‑Pesa). Banks offer internet banking, mobile apps, USSD banking and agency banking. These tools make payments faster and reach many people who lacked bank accounts before.

Ethical banking means treating customers fairly and acting honestly. Important principles:

• Confidentiality — keep customer data private.
• Transparency — clear fees and interest rates.
• Responsible lending — not giving loans people can’t repay.
• Fight corruption and money laundering (AML rules, KYC).
• Customer protection — fair complaints handling.

The Central Bank of Kenya regulates banks to protect depositors and the economy. There are schemes to protect small depositors if a bank fails. Banks must follow rules on capital, liquidity and reporting.

Current trends you should know:

• Rapid digitalisation: mobile apps, internet banking and agency banking.
• Fintech partnerships: banks working with tech companies for faster services.
• Focus on financial inclusion: reaching rural and low-income people.
• Cybersecurity and fraud prevention are growing priorities.
• Cashless payments and card/contactless options increasing.

Recap the role of banks: safe keeping, payments, credit supply, supporting growth. Appreciate how banks help communities, schools and businesses.