CHAPTER ONE
1.1 GENERAL READING
The
banking system in
started many years ago commercial banking activities started in in
1892.
However, in other to promote the growth of domestic money and
capital market and central bank of was established by the
central bank of
act of 1958.
One of the principal objectives of central bank of is to
promote monetary stability and sundry in the financial system.
Over the years the central bank of 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 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.
a.
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
contration of money supply by banks in the economy.
b.
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 today. The banking system
should not be neglected without making reference to the development of the
system.
This study is condisidering 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 causesof
banking supervision and examination so that the nation will no longer
experience banking distress any more.
1.4 OBJECTIVE OF THE STUDY
In
today, banking system has recorded a remarkable evolution since the central bank
of
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 awakeing 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 . 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
in
1912 West Africa became the agent of the currencyboard. The monopoly of banking
system by British was broker in 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
a.
To see that every likely
to benefit from loan ad advances.
b.
To assist Nigerian in
stabilizing industries and properties.
c.
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
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
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.