ABSTRACT
The project has
attempted to take an overview of the role of the Nigeria deposit insurance
corporation in distressed banks in Nigeria.
In chapter it focus
attention of the major problem some banks facing. In literature review it
focusers the control of distress in bank.
The research design it
helps the researcher to know how he will investigate the research. In findings
the project indicates that the government to protect depositors, particularly
the small ones against a backdrop of bank failures, conclusion government
should expedite approval process with respect to the adoption of some failure
resolution option and provide necessary fund for effective complementing of the
failed banks.
TABLE OF
CONTENTS
CHAPTER ONE
Introduction
1.1
Background of the study
1.2
Statement of the problems
1.3
Objective of study
1.4
Significance of study
1.5
Scope of study
CHAPTER TWO
Review of related
literature
2.1
What banks in distressed is
2.2
Characteristics of distressed banks
2.3
Control of distress
CHAPTER THREE
Research design &
methodology
3.1
Sources of data
3.2
Location of data
3.3
Method of data collection
CHAPTER FOUR
Findings
CHAPTER FIVE
5.0
Recommendations
5.1
Conclusion
Bibliography
CHAPTER ONE
1.0 INTRODUCTION
As part of the reform
measures taken to strengthen the supervisory all over the banking sector, the
Nigeria deposit insurance corporation (NDIC) was established in 1985 by decree
No 22 in order to promote public confidence in Nigeria banks. But in addition
to this, there was also the long-term need to create and sustain an enabling
environment that will engender safe and sound banking practices by protecting
the banking system against destructive runs, protecting bank deposits and
ensuring fair play amongst the competing banks. These cardinal consider actions
were rain formed by the lessons of history of bank features in Nigeria, the
experience of other countries where deposit insurances scheme are being
operated and there alive of the prevailing distressed financial condition of
the banks in particular and other financial intermediaries in the
financial sector in general.
In Nigeria today, hardly
can any year pass by without one hearing of one kind of distress or the other
in the banking sector. The number of banks, today, classified as problem banks
are on the increase and have continued to be of serious concern to depositors,
government and regulatory authorities. According to NDIC reports by the end of
1991, 8 banks were officially classified as distressed, the number rose to 15
in 1992. as at December 1993 27 banks were classified as distressed, the number
rose to 47 in 1994, 63 in 1995 and 89 in 1996. However the figure dropped after
the establishment of deposit insurance scheme to 34 banks in liquidation as at
December 2000. deposit insurance is a financial guarantee scheme, which ensures
that bank depositors do not lose al their deposits in the event of bank
failures.
1.1
BACKGROUND OF THE STUDY
The federal military
government decree No. 22 of 15th, June 1988. There is hereby
established a body to be known as the Nigeria deposit insurance corporation.
This corporation is not to insure bank deposits thereby helping to promote safe
and sound banking system in Nigeria, protect depositors interest and further
inculcate banking habit amongst Nigerians.
NDIC in an autonomous
supervisory body with powers among others, to examine the books and affairs of
insured banks and other deposit taking financial institutions operating in
Nigeria, to insure their total deposit belonging to the board members and staff
of the insured bank, deposits used as collateral and such other deposits board
of NDIC may exempt from time to time.
Deposit insurance is
financial guarantee instituted as a measure of safety for the banking system to
protect depositors. Deposit insurance promotes the stability of the banking
system. It assures the saver that his funds are safe and that the failure
of one bank does not mean that all bank is are in danger of failing. The
authorized capital of the corporation is N1000m Naira out of which N50m Naira
has already been called and paid up by the federal government of Nigeria to
establish the (NDIC).
1.2 STATEMENT
OF THE PROBLEM
These problems
militating against the distressed banks in Nigeria.
i.
Incompetent bank management: Most of the management teams of problem banks are
not competent enough to address the issue of distress squarely.
2.
Inadequate debt recovery process: The legislative provision for debt recoveries
is inadequate. The debt recovery process is sluggish, cumber some and does not
encourage speedy recovery of banks debts.
3.
Political factors: The harmful effects of the persistent political upheavals in
the country have the toll on business enterprises as well as on the banks. A
politically stable economy is necessary for effective performance of NDIC.
4.
Macro – economic recession: The depressed condition of the has continued to
adversely affect the operation of most banks especially the distressed ones.
5.
Poor funding: The funding of the NDIC is grossly inadequate. This explains wh6
the maximum insurance claim depositor of a failed bank is pegged at N50, 000
this amount is grossly inadequate.
1.3 OBJECTIVE
OF STUDY
It must at outset be
acknowledged that the sanitation of the banking system has bee collaboratively
carried out by a lost of regulatory authorities namely CBN, NDIC and the
federal ministry of finance among others. However, distress resolution which is
the card of the revamping exercise that is legally a primary responsibility the
NDIC going by the amendment to its decree. The corporation has therefore taken
a number of initiatives in this regard leading to evolution of a co-ordinate
approach for distress resolution.
In this project of the
role of the NDIC in the revamping efforts, it is network to distinguish between
some normal or ordinary supervisory actions of the corporation
that however, imp[act on the sanitization effort and those more or
less one-of actions taken to sanities the system. The first set of actions
refers to the normal on site examination and off-set supervisory activities of
the corporation. These actions provide the dial gnosis for updating the
trend in distress as well as indicating the next possible line of actions in
the sanitization drive. However, these normal supervisory activities will not
be elaborated upon here to minimize digression from the focus of the
presentation.
The second set of
actions conceptualized and implemented to sanities the banking system are
expectedly corrective as well as preventive of further deterioration in the
financial condition of the distressed banks.
1.4 SIGNIFICANCE
OF STUDY
BDIC has a very
important role it is playing with banking sector, NDIC insures bank deposits
thereby helping to promote stability safety, confidence and sound banking
system in Nigeria, protect depositors interest and further inculcate healthy
banking habits.
Through the
instrumentally of special promulgation of government and the collaborative
efforts of CNB, the federal ministry of finance and the federal ministry of
justice, the corporation has been able to recover debts otherwise August 1999,
about N7.6 billion has been recovered by distressed banks under the control and
management of the regulatory. Supervisory authorities while N35 billion have
been recovered from debtors of the 31 banks in liquidation.
In addition, the NDIC
has since its establishment been providing financial information on insured
banks to the general public. Such information has enabled the public to know
the financial conditions of the Nigeria banking industry. The dissemination of
financial information is done through the corporation’s publication seminars
workshops and symposia.
SCOPE OF
STUDY
The NDIC insures
deposits in commercial and merchant banks and other deposit banking financial
institutions, each insured bank must meet high standards of safety and
soundness in its banking practices. Adherence of these standard is determined
through regular bank examinations by the regulatory supervisory authorities.
The NDIC and the central
bank of Nigeria, if despite these precautions and insured bank get into
financial difficulties and must be closed for purpose of liquidations the NDIC
is on hand promptly with cash to relieve a depositor up to the maximum of
N50,000.
Deposit in this context
means monies lodged by the general public with any insured bank or financial
institution whether or not if is for safe keeping or for the purpose or earning
interest or earning whether or not such monies are repayable upon demand, upon
a given period of notice or upon a fixed date. The Nigeria deposit insurance corporations
protect the interest of creditors or shares of a failed ban
Department | Banking and Finance |
Project ID Code | BFN0109 |
Chapters | 5 Chapters |
No of Pages | 23 pages |
Methodology | Null |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
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Contact Us On | +2348039638328 |
Contact Us On | +2347026816414 |
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