The Role Of Banking Supervision And Examination In Nigeria (A Case Study Of Afribank Plc)

Project and Seminar Material for Business Administration and Management BAM

Abstract

The purpose if writing this project is for the partial fulfillment of the requirement for the award of higher national diploma in business administration and management.

This research project is aimed at examine the role of banking supervision and examination in Nigeria, using Union Bank of Nigeria Plc, Ilorin as the case study.

The project work is going to critically evaluate the problems such as poor management and loss of depositor’s funds encountered by the Nigeria financial institution. As a result of this problems. The research work be carry out with the aim of analysis and finding a lasting solution to this stated problems of Banking in Nigerian. The research project will also analyze then reasons why banking need to be supervise and examine, the conduct of supervisor and examined on site function and offsite functions, licensing, operational requirement at reserved requirement.

The research methodology is to give a comprehensive report of the methodology employed in collecting information. In this study the research will made use of both primary and secondary source if data in setting necessary information that is needed in writing this project. Chapter four deals with the presentation and analysis of data collected with the use of statistics instrument. There is needs to analysis the data collected since, all the data that is going to be gather is through concise use of questionnaire. Chapter five is the concluding part and some useful recommendation is going to be made to further ensure the role of banking supervision and examination in Nigeria.

Chapter One

1.1 General Reading

The banking system in nigeria started many years ago commercial banking activities started in Nigeria in 1892.
However, in other to promote the growth of domestic money and capital market and central bank of Nigeria was established by the central bank of Nigeria act of 1958.

One of the principal objectives of central bank of Nigeria is to promote monetary stability and sundry in the financial system.

Over the years the central bank of Nigeria as conducted regular supervision and examination of banks as a means of maintaining close watch on banking corporation to ensure that banks comply with banking laws and other directive stipulated by the monetary authorities. This help to promote high leveled quality banking services are maintained.
The central bank of Nigeria took over the entire functions of banking supervision and examination in January 1966, and on the awareness that adequate and proper supervision demanded and specialized institution that would bring together an experienced team of banks and other related professionals to facilitate the functions of bank supervision.

1.2 Statement of the Problem

It has been revealed from experience that banks face the following problem.

Poor management to establish sounds leading policies as adequate credit administration procedures many banks today also faced the problem of bad debts due to the fact that most of the borrower are getting into difficulty.
Similarly, there are problems of financial distress as a result of multiple contraction of money supply by banks in the economy.
Lost of depositor’s fund as a result of failure in proper credit control and management in their lending functions. As a result of these, many of the bank customers have decided to keep their money inform of asset and at the same time they are not encouraged in banking system.

1.3 Significance of the Study

This study is very important for the education of banking industry for the benefit of economic growth, ad development. In Nigeria today. The banking system should not be neglected without making reference to the development of the system.

This study is considering the fact that the banking system of this nation should be enlightened and educated so they can have the privilege to improve the banking operation.

It is with this intention that the study is to highlight the causes of banking supervision and examination so that the nation will no longer experience banking distress any more.

1.4 Objective of the Study

In Nigeria today, banking system has recorded a remarkable evolution since the central bank of Nigeria commenced operations.

However the need for the study is to examine the problem that may likely caused by the banking failure in the process of loss depositors fend the failure of other banking and financial distress as a result of multiple contraction? Of money supply.

This study also aims at awakening the banking agencies for proper management of banking activities. Also includes to evaluate a bank loan portfolio, and intern control system.

1.5 Definition of Terms

Bank:

According to advance learner’s dictionary of current English, a bank is an establishment for keeping money and valuable safely the money being paid out on the customer’s order (advance learner).

Commercial Bank:

These can be defined as a financial institution set up for keeping and lending money to people, owned by individual, organization or government for the main purpose of making profit (Ebeloku. A).

Central Bank:

According to CBN brief research department as the central monetary authority or an apex financial institution within the entire financial structure, which promote monetary stability and a sound financial system (Ebeloku A).

Supervise:

This simply means to watch and direct work, workers and organization (Mohammed. A.S)

1.6 Limitation of Study

For the purpose of the study effort were made limit the method of data collection through primary and secondary collecting method.

Similarly, finance was another important limitation to the study. This situation created time constraint and financial difficult.

Also the study is to carry out activities of the commercial bank jointly a case of union Bank of Nigeria. Another factor that contribute to the limitation of the study was the ignorance or misconception on the part of the respondent. Many a times the respondent. Many times the respondent will not likely to attend to the researcher, because use of the law that guide them, they will sometimes refused to disclose something.

Similarly, the problem of collating the formation or fact gathered has also contributed to the limitation of the study.
Transportation is our of the problem facing in the study.

1.7 Background of the Case Study

Banking activities standard in Nigeria in 1892. In 1912 West Africa became the agent of the currency board. The monopoly of banking system by British was broker in 1929 in Lagos when the industrial and commercial bank limited was formed by a group of Nigerians. The bank tried to do what the two British banks were reluctant to do, that is offer credit to Nigerians. Unfortunately, it had to go into liquidation in the following year due to completion from Europeans Banks.

In 1931, another Nigeria Bank came into existence, the merchantile Bank on the 11th of February, 1933. In midst of the economic depression, the National Bank of Nigeria was established, it his the unique distinction of being the first indigenous bank in ngieria it had an authorized paid up capital of N500,000 but only N1,752 was initially paid.

The bank was setup to achieve the following aims

To see that every Nigeria likely to benefit from loan ad advances.
To assist Nigerian in stabilizing industries and properties.
To operate in such away to give Nigerian confidence to work efficiently in commercial and industrial fields.

After the second would loans there was increased in economic activities which led to the establishment of more commercial bank in Nigeria economic life. The Agbolmagbe Bank was established in 1945 but later changed its name to Wema bank in 1969 after it was taken over by western Nigeria development corporation in 1992.
Accordgly, a meeting of government officials and representatives of banks were called and it was agreed that there was need for legislation in the use of the world bank in the interest of both general public and those engaged in the banking business.

Consequently, a banking ordinance based on the patron commission report was eached in 1999. The commission was appointed in September 1981 to required generally into the business of banking in Nigerians and recommendation to the government on the form and extent of control, which should be introduced. By the time the ordinance became operational in the country in 1992 up till date 2005, most of the mushroom banks in the country in 1992 up till date 2005, most of the mushroom banks have collapsed with the inactment of ordinance, the establishment of new banks were restricted and the existy ones were controlled. The effect of the various legislation and amendment to the banking act could not be over emphasized because they helped to check and give sense of direction on these banks that survived the exercise.

Chapter Five

5.0 Summary

Effects are to summaries all what have been writing so far on commercial bank in general and union banking supervision and examination.

The response made so far on the questionnaire help to know that the people solidly agreed on effort of banking supervision the objective of banking policy guideline as issued by the central bank of Nigeria was also among which is the official interference with the volume and director of the banking in those sector of the economy.

Similarly, banks are required to maintain capital funds unpaired by losses in such ratio as may be specified by the CBN.

A bank should therefore have enough capital so that depositor’s risks are reduced also. There are some limitations and difficulties part of which are fund to carryout the study, times very limited some respondent refuse to answer question asked.

In the study the information were gathered through the primary data (journal textbooks) and secondary data (personal interview).

5.1 Conclusion / Recommendation

The ingrate of failure among small-scale enterprises and default in loan repayment makes banks to have problem in making loan to small borrows.

However, the bank could reduce their approach in form of long delays in their dealing with this category of borrowers. There should be a conducted.

Furthermore, having decoded to grant the bank ability to function, the bank must be able to decide the legal from the banking must take. Banking industry on information technology to increase their knowledge and improve their productivity. It is hoped that the recommendation if adopted will go a long way to bring better banking supervision and examination procedure in Nigeria financial institution in general.

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