The bank type responsible for the formulation of rules and regulations guiding the banking industry is known as?

Step 1: Analyze the question The question asks which type of bank makes the rules and regulations that guide the whole banking industry. This is a regulatory role, not a service-to-customers role.

Step 2: Explain the concept Banks in Nigeria fall into different categories based on their functions:

• Commercial banks (e.g., GTBank, Zenith, First Bank) accept deposits, give loans, and provide everyday banking services to the public. They follow the rules and do not make them.
• Merchant banks provide specialised services to businesses, such as underwriting, project financing, and advising on mergers.
• Mortgage banks provide loans for buying, building, or renovating houses.
• Central bank is the apex (highest) bank in a country. In Nigeria, this is the Central Bank of Nigeria (CBN). Its functions include: • Formulating and implementing monetary policy • Regulating and supervising other banks • Acting as banker to the government and to other banks • Acting as lender of last resort • Issuing currency • Managing foreign reserves

Step 3: Apply to the question Since the question asks for the bank that formulates rules and regulations for the banking industry, we look for the regulator. That is the Central Bank, which supervises all the other banks (commercial, merchant, and mortgage) and sets the guidelines they must follow, such as the cash reserve ratio, liquidity ratio, and minimum capital requirements.

Step 4: Answer The correct option is B. Central bank.

Exam tip: Whenever you see words like regulate, supervise, apex, monetary policy, lender of last resort, or issue currency, think Central Bank. Remember: Central bank is the "bank of banks" and the referee of the banking game, while the others are players.