The Role Of Cash Management In The Operation Of Nigeria Commercial Banks (A Case Study Of UBA Plc Ilorin Branches)
The major aim of business organization whether commercial or industrial is to make profit, an enough profit to remain in the business. Thus, it is necessary for an organization to identify the area(s) to be exploited towards the achievement of its goals and its substance in the business.
To the commercial banks, the most sensitive area that could mark its our right demise it, cash management that is why it is said in banking industry that the importance of cash management is equal to the existence of the industry itself.
Cash management through very important to every organization is more pronounced in the commercial banks because it is the basis of their transactions. Availability of cash to the customers encounter constant in availability of cash. Thus could lead to panic withdrawal, movement of accounts and reduction in cash lodgments.
Before now only commercial bank attached most importance to the area of cash management but since the mass distress of commercial banks and finance houses which could be attributed to its cash management is now being religiously pursued in commercial banks as tool for survival.
It is therefore, necessary in the cause of this research to let the customers know that there is more to cash and its management than what they see in their day to day transaction in the commercial banks.
The business should be able to match its cash outflows with cash inflows, even when it is growing the pace of growth of the business should not outstrip the ability of the business to finance the additional as sets that it need to support the growth.
There ought to be efficient management control over stocks, debtors and creditors. A distinction should be made between essential capital expenditure and postponable fixed asset replacements so that decisions can be made when necessary about shelving certain capital expenditure project.
Using United bank for Africa Plc one of the most viable bank in this country will no doubt intimate the customers with cash management procedures in the banks as well as equipping them with the need for some measures or action to be taken at time in relation to cash in the commercial banks.
The project dwell extensively on the area of cash transactions, control and management in UBA Plc as obtained in most of the commercial banks.
1.1 Statement of Problem
The study is to have in depth knowledge of cash management in commercial banks.
The selection of UBA Plc is as a result of its viability and the location of some of its branches in the commercial nerve center of Ilorin. The problems encountered in the course of the project were that of getting relevant data and time. Data are not readily available and where they are available they are not accessible because in most cases, they sought to get clarification from their Head office before making the available. The reason given is that some of these relevant data can not just be disclosed without the consent of the appropriate authority because of their competitor.
The short period couple with chaotic transportation problem in Ilorin was a big constraint to the demand of the research work.
1.2 Objective of the Research
This research work is embarked upon to achieve the following objective:
- To determine the importance of cash to the commercial banks.
- To determine various sources of cash to the commercial banks and suggest way of managing them.
- To identify and analyze various internal control measures in cash lodgment and disbursement.
- To revive cash management procedure within and outside the branch and recommend ways of improving them
- To focus the votes of cash management in the distress commercial banks.
- Outline and analyze various that could prevent commercial banks from accepting cash and honouring customers demand for cash
- Review various control bank guidelines that affect the cash management in commercial banks
1.3 Research Methodology
The research will be carried out in five branches of United Banks of Africa plc based in Ilorin, the research method is an empirical one which involves the collection of data through personal interview and administrating of research questionnaires to the branch managers, accountant cash officer and officers.
Some managers, accountant cash officers and officers in these time selected branches for the research will be made to seek their opinion on the level of cash management and the participation of staff as well as the effects on improper cash management on commercial banks. The process is hopes to least for five working days.
The questionnaire is divided into four sections. Section one entails the personal data, section two and three are concerned with the educational background and working experience respectively.
While section one, two and three are designed for the purpose of determining the biographic characteristics of the respondent section four is to know the essence of cash management and this is adhered to in the commercial bank.
1.4 Significance of the Study
The roles which improper cash management has played in the distress of various commercial banks and even finance house has prompted me to make use of one of the most variable banks in Nigerian, UBA Plc, as a case study for others to know the cash management procedure that is obtained there and identify their areas of mistakes.
The research work will also broaden the knowledge of the customers in the area of cash transactions and the reasons behind some cash control.
1.5 Definition of Uncommon Terms
Cash management is the process of utilizing the available cash in an organization to the maximum advantage of the business and the customers.
Cash management in commercial banks unlike other organization do not deal with how cash are received and spent rather, it is the acceptance and safe keeping of deposits and ability of making some available to the customers when demand and at the same time being able to make maximum utilization of it within the interval.
Cash management in commercial bank entails that.
- The sources and duration of every deposit should be identified and recognized
- Fraud that could arise as a result of improper handling of cash are prevented with proper internal control measures.
- Adequate insurance in undertaken to identify the customers from losses that could arise through banks breaking, fire and other disasters.
- Adequate dual control measures are adhered to in every face of cash transactions.
- The cash officers should know their average daily cash utilization as well as being able to make reasonable cash projection.
- Necessary cash balancing procedure is utilized to the fullest.
- The cash officer know that branch limit and request for evacuation while still covering this excess with insurance overnight.
- The branch religiously pursues the central bank guideline on cash on cash lodgment and withdrawals.
- Customer are advised on security and adequate securities are provided for the cash within the branchy as well as the ones moved from branch to branch and branch to head office.
The essence of the cash management itself which is fact is the reason for the above measures in for the customers to collect their deposition on demand without any sweat of excuse
1.6 Organization Plan/Chaptalization
This study has satisfied certain objectives which it sets to achieve one of such is that this study has determined that commercial banks employ cash management total and control in their operations.
There was also a conclusion that improper cash management could lead to a collapse of a commercial bank. While majority of the respondent welcome central bank of Nigeria’s intervention, those who are against based their argument on undue interference and commercial banks not given former hand to operate
Summary of Finding, Conclusion and Recommendation
5.1 Summary of Finding
One of the major findings of this study was that all the five branches surveyed employed cash management principles in their day to day operations
This was revealed from the analysis of the Reponses received from the managers, officers, supervisors and clerks in these branches. In the interview, every person interviewed believed that cash management is necessary in commercial banks. The gave 100% responses, 74.7% of the responses gather from these branches through questionnaires confirmed the necessity in cash management in commercial banks
Another major funding is that improper cash management could lead to collapse of commercial banks. This was clear from the tables of ananlysis. In the oral interview, 625% of the responses agreed that improper cash management could lead to a total collapse of commercial bank.
Likewise 74.97% of the responses from the questionnaires attested to the same fact.
The third finding is that central bank of Nigeria intervention and control in the activities of commercial bank is a welcome idea. 68.76% of the responses from oral interview found it necessary and 78.7% of the responses from the questionnaire agreed to its necessity. Another major revealing finding is on the increase in capital structured and taking off of capital of commercial banks. 62.5% responses from those interviewed indicated the necessity of the increase in capital structure and 69.5% of the responses from the questionnaire also saw the needs for the increase in capital structure of commercial banks.
Another major finding is the adequacy of central bank of Nigeria’s intervention. 64.29% of the responses from those orally interview believed in its adequacy as 70% responses from questionnaire also agreed that central bank of Nigeria’s intervention in the activities of commercial banks is adequate.
This has satisfied certain objective which it sets to achieve one of such is that this study has determined that commercial banks employ cash management total and control their operations.
There was also a conclusion that improper cash management could lead to a collapse of a commercial bank. While majority of the respondents welcome central bank of Nigeria’s intervention, those who are against it based their argument on undue interference and commercial banks not given from and to operate
The study was also able to determine of that increase in capital structure of commercial banks is accepted and was able to extract reasons from structure or not, if proper cash management structure is not place, collapse will be inevitable and that high capital structure is not a preventive measure but a remedy after collapse
the regulatory body of the capital bank of Nigeria has a crucial role to play in the cash management process because, it is the responsibility of the central bank to control the cash management of the commercial bank in order not to follow inflation to threaten the economy of the nation.
Furthermore, it gives directives based on the monetary policy which all banks should follow. It gives every bank a reserve limit that should be kept with it as well as penalizing any bank that goes against the laid down procedures.
The central bank is the alpha & omega to the commercial banks as it decides its existence and demise.
The introduction of internal control has an important role to play in the commercial banks in other to prevent fraud that could arise as a result of improper handling of cash
Insurance policy is another point that should not be over emphasized because it helps the commercial banks in gaining its stands after loss of any particular kinds through indemnification.
Lastly, the commercial bank also needs to give adequate gaining to its staff in other for them to work effectively and efficiently.
It must be retested that business practice is subject to the pervading social environment and that accordingly, future changes in that social environment may necessitate re-interpretation of the evidence presented in the study.
The Role Of Cash Management In The Operation Of Nigeria Commercial Banks (A Case Study Of UBA Plc Ilorin Branches)
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