The Banking System.
Do you know that you are borrowing your money to the bank if you own a BANK account. Yes, the bank borrows your money, that's actually what happens under the premise of keeping your money for you.
Well this is how it works...
Let’s say, for example, that the bank has a savings account with a 1.5% rate of return, They take the money from your account (and a lot of other savings accounts) and use all of that money to buy (for example) a treasury note, which is guaranteed by the federal government and returns about 5%.
Even better, let’s say that someone else comes into the bank and wants to borrow some money for a car. The bank offers to lend them the money for the car at 7% return, so they take that money from the accounts at the bank and give it to the borrower. Then, the borrower pays back that money plus the interest, of which they pass on 1.5% to you, keeping 5.5% for themselves.
So, hypothetically, let’s say a bank opens for business and two people open savings accounts at 1.5% with N500,000 each. Then, Judy comes in and wants to borrow N1,00,000 for a car loan for one year, so the bank uses the N1,000,000 the people have deposited. At the end of the year, Judy will pay back the N1,000,000 plus 7% (N70,000). Then, each of the savings account holders come in and clean out their accounts. Each one takes out N500,000 plus 1.5% (N15,000) for a total of N1,030,000. The bank thus keeps the remaining N40,000. If that happens, say, 100 times in a year (200 savings accounts, 100 car borrowers), the bank makes N400,000 a year.
But you should know its way much more than that when you compare the thousands of people that has accounts in these banks and the thousands, millions they lend to borrowers.
Note that the bank has other ways of generating revenue.