CHAPTER ONE
1.0 INTRODUCTION
In July 2004, the new governor of the central bank
of Nigeria (CBN), professor Charles Soludo announced that the new minimum
capitalization for bank in Nigeria is N25
billion (approximately) all bank are expected to comply by this direction by
December 2005.
This announcement struck the banking section like a
storm on a dark night. And its has left in its wake a heated debate on its
appropriateness in relation to Nigeria banks and the current state of the
economy. It is undeniable that this announcement brought with it a number of
consequences.
As a result of the central bank of Nigeria (CBN)
policy, banks across the nation have to strive for survival. Along the way,
some banks liquidated, while some were acquired and others got merged.
Banking as a discipline and a profession has assumed
a multi-skilled dimension due to its perceived dynamism in the word economic
and social development.
In Nigeria, first bank ordinance was enacted in 1952
this to part an end to the mass features of banks witnessed between 1892 when
African banking corporation (now first bank Nigeria) debated as the first
established banking industry has become the most regulated sector despite the much – vaunted deregulation now
prevalent in many countries of the word and Nigeria inclusion.
The intercontinental bank plc is our focus under
this study.
1.1 BACKGROUND OF THE STUDY:
Given
the magnitude of banks problems which confronted Nigeria banking industries
especially since the early 1990s, stagnant banks growth inadequate cash to meet
their current obligation, giving loan to uncertified persons, militating the
right of their customers (interest) and not fiduciary in managing the affairs
of their customers, the importance of banking industries reform become
paramount.
Therefore, there was need to remove policy
distortion which had stalled banks progress. In particular, policy makers began
to recognition more visibly the adverse effect of exclusive reliance in the set
of policy instrument being enforced through cumbersome administrative control
and regulation. It was rightly considered that failure to initiate reforms
which would stress deregulation. If existing policy instrument would seriously
jeopardize the long term growth and development prospects of Nigeria banks
Bank deregulation which involves appropriate realignment
in capital structure, management, factors determine granting of the public and interest rate on loan policies
(Base lending rate) was viewed as a tool for reducing undue Nigeria
intervention in banking activities and providing relevant structure of
incentives that would put the banking industries on the path of recovery and
growth.
1.2 STATEMENT OF THE PROBLEM
The problem of this study is that despite
deregulation in banking sector, banking in Nigeria are still to ascertain some
objective of the deregulation, like levity handling of affairs of their
customer, giving loan to uncertified person automated teller machine fraudulent
act (ATM) and how there will be talked with aim of develop Nigeria economy.
Hence, the watch word of this study is to pinpoint the factors that initiating
the hall mark of the deregulation in banking industries not yet to be achieve.
1.3 RESEARCH QUESTION
For the purpose of this study five (5) hypothesis
are stated and tested.
1. Is
it the aims of deregulation in banking industry is to develop Nigeria economy?
2. Does
deregulation really contributed to the development of Nigeria economy
3. What
is the problem militating against deregulation in banking industries?
4. Has
deregulation in Banking Industries concern loan granted to individuals and
corporate body?
5. Do
benefit from this deregulation?
RESEARCH
HYPOTHESIS
The above questions are required to test the
following hypothesis.
Ho: there is no significant relationship between
and development of Nigeria Economy and deregulation in banking industries.
Hi: there is no significant relationship between
the development of Nigeria economy and deregulation in banking industries.
1.4
THE
PURPOSE OF THE STUDY
The
study is carried out to reveal the effect of deregulation in banking industries
in Nigeria economy. It’s also made it possible to know the effect that banking
institute is having no economy whether it is development effect or its economy
still stagnant. It bring rise in national income of Nigerians between 1930 and
1948, there was crying for more banks on part of Nigeria to complete with the expatriates
in banking operation business.
Another
reason for the massive banking development was purely economic.
The
banking boom of 1947 to 1952 concealed with the period of activity of
nationalists movement in Nigeria. They made the call that the major reason for
under development of the country was her economy that was subjected to the
British economic. It had the businessman to think of business in banking so as
to replace the monopoly of the expatriates in the banking industries.
1.5
THE
SCOPE OF THE STUDY
The
research work of this study includes the primary information from bank
(intercontinental bank plc, Oshogbo, Igbona branch), the senior and junior
workers of intercontinental bank plc Oshogbo, Igbona branch, coupled with the
discussion on the underlying factors of the system of account, liquidity,
profitability and visibility factors that can help economy of Nigeria to be
developed, but most of the required data were restricted to certain point. The
study will also describe the function and achievement of Nigeria banks after
the deregulation of the banking industries.
1.6
LIMITATION
OF THE STUDY
In
the course of the study, we were faced with a lot of problems, which takes long
time together the information required.
It
took a lot of time before we can get co-operation of the staff in the banks.
It also takes a lot of time and stress to convey them that
the information required; it’s not to spy out secret of the business.
They felt reluctant to respond and ignored certain question
in the process.
The financial and time factor are also impeded the process.
1.7
SIGNIFICANCE
OF THE STUDY
In
the aim of this study, the research work attempt to highlight the effect of
deregulation in Banking Industries and how far it has been affecting their operations.
1.8
DEFINITION
OF TERMS
a. Monetary Policy: – is a major economic stabilization
weapon which involves measure designed to regulate and control the volume, cost
and availability and direction of money.
b. Economy: – this
is the financial unit or state of a country.
c. Banking Ordinance: – was the first law banking system.
It defined banking business also provide license for the bank they can start
business operation.
d. Bureau de change: – is
non- financial institution but it has been classified to deregulation foreign
exchange also it’s to provide money or currency to small users.
e. Indigenous Banking: – are
bank owned by the Nigerian citizen. It was started with the National bank in
1933 and the bank was characterized by unhealthy competition.
f. Bank Liquidity: – this refers to the cost reserves or
balance held by banks to make-up with their customer requirement.
g. Liquidation means
the term used to signify the process of winding up a company and thereby
bringing to an end.
h. Profitability: – this is money gained on a business or
advantages gained for some action lastly it are the different between cost of
purpose or production and selling prize.
i. Convenience: – Bank services should be provide to
customer without much regour or difficulties in other words, customers should
enjoy banking services with ease.
j. Dealing Member: – This comprise those individual
firms or corporate bodies licensed by the council of the exchange to stock,
shares and others securities.
k. Promissory Note Is
an unconditional promise in writing made by one person to another signed by the
makers, engaging to pay on demand or after fixed or determinable future time a
sum certain in money, to or to the order of a specified person or to bearer.
l. Role: – It
is the importance or usefulness of something
m. Financial Institution: – This is the
institution that use its fund chiefly to purchase financial asset deposit,
loans, bonds and debentures as opposed to tangible assets.
n. Investment:- this is the purchase of security
that offers safety of principal and satisfactory equal to risk.
o. Securities: – This is an income validity
documentary by which the claim of holder is specialized property is secured.
p. Financial Intermediaries: – These
are the people that act in the business transaction between the financial
institution and the customers.
q. Capital: – This
is the amount of money that is used to commence a business.
r. Industries Financing: – this is the
raising of capital for farm through bank issues of loans and advance for the
purpose of working capital expansion.