Analysis Of Funds Management In Providing A Sound Banking System In Nigeria (A Case Study Of Union Bank Of Nigeria Plc)
Table of Contents
- Title Page
- Table of Contents
- 1.1 Background of the Study
- 1.2 Statement of the Research Problems
- 1.3 Research Question
- 1.4 Objective of the Study
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope and limitation of the study
- 1.8 Definition of Key Terms
- 1.9 Organization and Plan of the Study
2.0 Literature Review
- 2.1 Historical Background
- 2.2 Definition of Cash Management
- 2.3 Meaning of Fund Management
- 2.4 Cash Planning
- 2.5 Cash Budget
- 2.6 Function of Deposit Money Bank
- 2.7 Cash Balance Required
- 2.8 Cash Balance to Current Assets Ratio
- 2.9 Effect of Cash Management
- 2.10 Need for Holding Cash
- 2.11 The Creation of Money by Deposit Money Bank
- 2.12 Qualities Associated with Credit
- 2.13 Investment of Excess Cash
- 2.14 Internal Control of Cash
- 2.15 Limitation of Credit Creation
3.0 Research Methodology
- 3.1 Sources of Data Collection
- 3.2 Population and Sample Size
- 3.3 Sampling Technique
- 3.4 Method of Data Analysis
- 3.5 Limitation of the Study
4.0 Data Presentation, Analysis and Interpretation
- 4.1 Data Presentation
- 4.2 Five years financial summary for the Year 31st March, 2015.
5.0 Summary, Conclusion and Recommendations
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendations
1.1 Background of the Study
The Central Bank of Nigeria is a federal government bank. It is referred to as the father of all banks. The country as it is responsible for issuing currency and regulating the countries monetary policies. The Nigeria deposit money banks are controlled by the central bank through it clearing house. A system by which inter-bank through debtless is settled. There are twenty two banks in Nigeria with commercial bank account for more than half of numbers.
Although deposit money banks in Nigeria carry out other banking functions they concentrate mostly on deposit banking.
The management of fund is deposit money bank particular reference to Union Bank of Nigeria Plc is the topic reviews in the project. They make up of the firm’s capital structure the management of fund, motive of holding money, the firm financial statement to outsiders and its operation are the subject matter of the review.
1.2 Statement of the Research Problem
In this era of bank distress management finds has been a matter of concern to banks and government even the customers. The statement of the research problems are as follows under the creation of credit, the deposit money bank ability of Union Bank PLC, Ilorin.
- The monetary Authorities actions: the central bank has a number of measure that include, adjusting the bank ratio.
- Government Legislation: the withdrawal of government accounts restrict deposit money bank ability to create credit.
- The probability of cash drain of other bank.
1.3 Research Questions
The project work is intended to review the management of fund of commercial banks with particular reference to Union Banks of Nigeria Plc Ilorin.
As a result of this the following questions arise.
- What are the banks sources and application funds?
- What constitute the bank’s capital structure?
- How does the bank manage its cash?
- What is the function of the bank regarding cash management?
- What are the economy importances of banks?
- What are other kinds of service rendered by banks?
- What are the effects of environmental and structural change to?
1.4 The Objectives of the Study
The objectives of the study are as follows:
- To define the term fund management
- To identify the various function of commercial banks.
- To critically examine fund management in commercial banks.
- To appraise the problems encountered by banks in the management of it funds.
- To ascertain the roles of commercial banks in business development.
- To make recommendation as to how commercial bank can manage it funds prudently.
1.5 Research Hypothesis
In the courses of the research work, the following hypothesis will be tested
- H0: analysis of funds management do not provide a sound banking system in Nigeria
- Hi: Analysis of fund management provide sound banking system in Nigeria.
1.6 Significance of the Study
It is imperative to mention here that the topic ‘Analysis of Fund Management rare topic’.
This write up will help to receive the mind rating managers to the importance of managing fund as well as suggest to them better techniques to be used in the management of funds. The study will provide a frame work of knowledge that will assist the existing and potential commercial banks in Nigeria.
Commercial banks will find it useful in developing a good operation system of their banking activities. The knowledge of the study will no doubt contribute greatly to the mush take about economy as management of cash is a major factor in a country’s economy.
1.7 Scope and Limitation of the Study
The scope of the study is to carryout on depth investigation into fund management in Nigeria deposit money bank using Union bank Plc Ilorin as a case management in providing the research project work, the following problems were encountered.
- Luke warm attribute from respondent as they treat all information.
- Embarrassment during the conducting or collecting information from the workers of Union bank.
- Pressure of work for the workers of Union Bank.
1.8 Definition of Key Term
This term used here in relation to fund. It include the process of safe-guarding cash, controlling cash and marketable securities forecasting cash requirement as well as appraisal of investment opportunities for cash and research items towards generating more profit.
Define as money or legal tender that constitute negotiable instrument which could be used to settle any contractual obligation fund and cash can be used interchangeably.
A cheque is an unconditional order in writing whereby a person instruct his bankers to pay on demand a stated sum of money from his current account to a named person.
This is the nearness to cash of assets, it is the state of being able to raise fund easily by selling off the assets of a company.
v. Float Time:
This is the length of time necessary for a cheque to make its way from the issuer to the player back the clearing process until the cheque is charge against the issuing account.
This is the ability to meet debt payment on due date by having money available in firm of cash.
vii. Bank Draft:
These are bill of exchange drawn by one banker to another. They firm a convenient means of remitting money.
viii. Over Draft:
This is the amount granted to a customer by the bank. The customer drawn more than what is inside his account.
ix. Bill of Exchange:
It is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain of money to or the order of a specified person.
x. Dormant Account:
This is an account which has not been operating for long (one year and above) no operation will be allowed on it including payment of interest until it is reactivated with an explanation to the bank by the customer.
xi. Certified Cheque:
This is cheque issue by the bank to a customer on demand with the work certified payment of a cheque is contain.
xii. Mail and Telegraphic Transfer:
These means of remitting fund from one bank to another in different vocation.
xiii. Bankers Payments:
This is an instrument used to settle inter-bank payments within the same clearing town. It is usually presented throughout clearing house.
The term fund can be derive in three ways it mean (i) cash (ii) working capital (different between current assets and current liability) (iii) finance resource (arising from both current and non-current assets).
1.9 Organization and Plan of the Study
The study is divided into fine chapter,
- Chapter one: is the introduction which contains background, statement of the problem, objectives, significance of the study, research question, scope, organization of the study and the definition of the key terms.
- Chapter two: it deals with literature review which contains definition of cash management, meaning of fund management, function of commercial banks, fact of cash management, cash planning cash, budget cash flour statement, cash balance required and limitations to credit creations.
- Chapter three: is research methodology which contains historical profile of Union Bank of Nigeria Plc Ilorin, Data Analysis, Population and Sample Size and Sampling techniques.
- Chapter four: is data presentation and analysis.
- Chapter five: consist of the summary, conclusion and recommendations.
Summary, Conclusion and Recommendations
It has been seen that the firm employs numerous resources of which one of it is cash. When the enterprise started operating cash is generated from the sales of share to intending investors. The business of any bank is purely on cash and customer. The bank refers to these as assets. This project work is concerned with the management of cash which is the function of financial managers.
The general problem affecting cash management have been left in the bank account of companies which been leading to liquidity and solvency problems.
In order to attain this objective, a lot of problem are envisaged as contained in chapter two which determine the area of problem. Hypothesis is arrived as so as to find various way of solving them.
To achieve the aim of the study, the research collected relevant data using.
- Interview with the management of the bank
- Documentation method
Cash management techniques have been considered using union bank of Nigeria plc, Ilorin as a case study. It has been seen that the bank hold cash reserves short term and liquid marketable securities for three reasons.
- Conducting transaction
- Satisfying precautionary speculation
- Financing possible speculation
The effect cash planning has also been considered. It has been seen that firm’s fund flows are matched with its fund as a result of forecast and budgeting, cash management involves improving the financial manager with a gauge for determining cash receipt and expenditure.
Another area covered was cash balance require to kept by the bank. The ratio which include the relationship of the cash balance of other assets and liquidity ratio were considered.
Union bank plc, Ilorin was not found to deviate too far from the hypothesis concerning holding and optimum cash balance, be it deposit bank, government or private cannot survive without efficient management and control of it cash resources.
Failure of banks that come into being earlier was because there was no cash management control. It is therefore a paramount important that there should be a system of cash management and control in any banking setup union bank plc, Ilorin is said to maintain a good system of cash control and management which they carry out promptly with the main branch.
Profit maximizing has been the watch word of the bank and resources. Utilization is good as the bank is generally said to have on efficient cash management.
The economy and the deposit money bank are both fairly liquid at present due to lack of instrument opportunities resulting from the economic difficulties currently facing the country. In order to maintain good standard, profit maximization, adequate control effective and efficient cash management recommendation as the following procedures.
1. Counter Service:
The counter service is in need of urgent improvement. The bank needs to be set up its training programme class room training should be supplemented with on the job training. The senior branch personnel should move round the branches to satisfy himself on the quality of customer services that will be on important factor to increase deposit ratio. To be efficient, the bank should result move workers to help serve the customer at the shortest possible time.
The need for the bank to adopt technology in accounting system cannot be over emphasis in doing this the high rate of expenses incurred by the bank i.e. overtime hour will be reduced to minimum as the use of computer will save a lot of time.
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