THE EFFECTS OF BANK INSPECTION IN ENFORCING BANKING
REGULATION IN ZENITH BANK, UBA OR FBN ETC
ABSTRACT
Just as every sector of the economy is eager to
improve her condition through various research work, it is high time for the
banking sector to gear up along with others by searching deep into the effect
of banking inspection on enforcing banking regulations. This idea has been
conceived in for a long time through my over 3 years of experience in carrying
out internal control and inspection function with the banking industry. The
study suggests a forward steps towards the needs to have a sound effective and
efficient inspection division in all banks and financial institutions alike in
order to enforce banking regulations and of this is adopted, it will reduce
irregularities, persistent (CBN) penalty frauds thereby resulting to a greater
profits, high return of shareholders, tends greater growth and sustainability
in the banking sector.
TABLE OF CONTENT
Title page i
Declaration ii
Approval iii
Dedication iii
Acknowledgement iv
Abstract vi
Table of
content vii
CHAPTER ONE
1.0 Introduction
1
1.1 Statement of the problem 2
1.2 Objective of the study 3
1.3 Research Questions 4
1.4 Significance of the study 5
1.5 Scope of the Study 7
1.6 Historical Background of First Bank of Nigeria Plc
Kaduna Branch Yakubu Gowon Way Kaduna 8
1.7 Definition of the Terms 9
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction 15
2.2
Definitions
of The Term Inspection 16
2.3
Theories
of Bank Inspections 17
2.4
Types of
Inspection 22
2.5 Methods of Bank Inspection 27
2.6
Relationship
Between Bank Inspection And Regulation 28
2.7
Impact
of Bank Inspection on Regulation In The
Banking
Industry 31
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
34
3.1 Research Method Used 34
3.2 Justification for the Method Used 34
3.3 Instrument and Tools Used 35
3.4
Research
Population And Sample Size 36
3.6 Statistical Techniques Used In Analyzing 37
3.7 Summary 37
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0 Introduction
39
4.1 Presentation of Data Analysis 40
4.2 Summary of findings 45
CHAPTER FIVE
5.0 Introduction
46
5.1 Summary 46
5.2 Recommendation 49
Bibliography 54
CHAPTER
ONE
1.0 INTRODUCTION
In an increasingly competitive banking environment which is
characterized by frequent changes in the regulatory environment, high cost of
operations, dim misting spreads on profit from business as a result of sharp
practices and the restriction imposed by unstable political and economic climates.
It is imperative that who are able to detect irregularities and monitor
discrepancies before impose a cost burden on the bank.
The relevant of the forgoing emphasis is underlined by the fact
that in the banking sector, the most essential differences between one bank and
another is the quality of staff. The degree of efficient operations and
effective internal control system. The system in attaining these overriding
objectives is the effectiveness and efficiency of the banks inspector policy
system and procedure.
It is common realization than on effective inspection system
services as a foundation for ensuring that the assets of the bank are
adequately protected in order to support the banks aggressor business plans
therefore, it is essential that banks as a matter of deliberation policy should
continually obtain information about the inspection policy, system and pattern
in the industry so as to ensure that availability of a verifiable and
consistent basis if assessing the maximum utilization of shareholders finds and
of its internal control and monitoring mechanism.
1.1 STATEMENT OF THE PROBLEM
It has been observed that some banks are by for performing better
than others and these performing banks are mostly those with a sound inspection
division. Bank inspection as a banking career has over the years been regarded
as the most volatile aspect of responsibilities despite certain contradictory
view of inspections, staffs who are other been looked upon as the police of the
bank as well as those that flock into the abyss of a death and isolated from
the existing bank customers international relationship.
On the other, the dilemma on the part of the branch staff being
inspected. They see inspection staff as enemies of progress whose objectives
are to checkmate their career growth and also sees work by magic work and
unwritten rules rented in enclosure knowledge.
This research is carried out to debone those fears assumption and
wrongly held views and in particular to real the truth of the subject to other researchers,
scholar bankers and banks as a whole. Though recently introduced reforms
imposed by the immediate past CBN Governor – Charles Soludo and the present CBN
Governors Sanusi Lamido Sanusi.
1.2 OBJECTIVE OF THE STUDY
– To
find out the need for fostering and maintain a sound inspection system in the
banking industry.
– To
determine whether banks comply with the condition of the regulatory authority
and to establish that the component structures of the bank are guided on the
right part in implementing the management policies at all levels.
– To
identify areas of bank weakness in order to prevent or minimize loses and to
ensure that proper control mechanism regarding operational procedures are put
in place as well as strict adherence to every transaction in the bank.
– To
proper solution which will prevent the reoccurrence of frauds irregularities,
policy violations and exploitation as a result of internal control weaknesses
in the existing inspection division of the various banks.
1.3 Research Questions
1. Why should sound inspection be carried out
on banks?
2. Do banks comply with the conditions of the
regulatory authorities?
3. What are the weakness
areas of banks’ Operations?
4. How
can reoccurrence of frauds and other irregularities be prevented in banks?
1.4 Significance of the study
As much as it will be a great importance and necessity in ensuring continuous
research in undertaken to provide new and unique concept of bank inspection
that would make certain banks gain access to such information in achieving a
significant leverage over its pears in the industry this study is expected to
serve as a secondary data for future researchers, scholars, students as well as
the management of first bank of Nigeria Plc (FBN) and other banks in the
industry.
Past studies and experiences have showed that no bank or any
financial organization has maintained a steady trend of its business plans
without an effective and efficient inspection or internal control system
mechanism hence the need for a bank or any financial institution with a weak.
On 31st March 1894 the head office was located in
Liverpool in London, under the cooperative company in Lagos and was
incorporated as a limited liability company in London 31st March
1984 with name of the bank of British west Africa with a paid up capital of
12,00 pounds sterling, it had absorbed its predecessor, African banking started
business in 1892 and in 1896 a branch in Nigeria was opened in Africa gold
coast (Ghana) whole another branch was established in serial eon in 1898. The
second branch in Nigeria was open in the old caliber in 1900 and two years
later, its northern regional branch at Kaduna was also opened. Which is the
main concern as far as this research work is concern.
The branch has experienced phenomenal growth over the years with a
share capital of 55.6 million naira (including a bonus reserve of (55.8 million
naira) in 1995 at N500 million in 1998. The bank total assets current stand at
60 billion naira. At the commencement of operational in 1894 it has a staff of
six(6) comprising of three (3) European and (3) three African. But in 2006, the
bank virtually materialized. In its march toward national development, the bank
has led to continually adjust its organization structure and corporate entity
started with west African countries the bank was incorporated locally in 1969
to become standard bank of Nigeria limited (SBN). This was in response to the
dictate of company decrees of 1986 and thereafter the bank became a cooperate
entity. Further changes in the name of the bank were made in 1979 and 1992 to
first bank of Nigeria limited also to first bank of Nigeria Plc
respectively.
First bank of Nigeria Plc (FBN) has diversified into a wide range
of banking activities and subsidiaries including merchant and inter-na-tional
banking.
Inspection policies, system and pattern to put in place a dynamic
inspection division in place.
1.5 Scope of the Study
In the study, the effect of banking inspection and regulatory body
(CBN) in enhancing quality and effective services delivering to the entire
financial institutions and that nation at large.
It therefore, call for an intensive research work into the
inspection division with a view of know more about how it enfore, due to some
constraining authorities.
However, due to some constraining factor such as time, lack of accessibility
to confidential records financial unco-operative staffs reluctant to answer
questions and problem, mobility are regarded as some of the limiting factors of
this research work. Time factor as stated above his great relevance to any
research work but due to research normal academic program, little time is
devoted to this research work. Time factor as satted above great relevance to
any research work but due to research normal academic program, little time is
devoted to this research work. “confidentiality of records is the order of the
days. Banking business. People are usually afraid of being devoted for fear of
victimization by their employer. While finance as the name implies constitute a
major setback in any human endevours especially when it involves research work.