Banking in Nigeria has gone through very changes within this
decade. The industry has grown beyond optimistic expectation. Over the period,
the number of banks expanded five fold, banking operations were substantially
deregulated, competitions increased and banks were forced to be more innovative
and service oriented.
Banking system is expected to offer effective and efficient
services to its customers and the economy as a whole.
It is seen that a bank with limited problem will support and
revitalize a respectable and dependable banking system.
Unfortunately, the uncontrolled rate of growth of the industry has
produced undesirable side effects like increase in fraud and other form of
banking malfeasance cash shortages while mismanagement, bankruptcy and
illiguidity are found to cut across the whole banking system through the
activities of board members.
These inspired me a lot to write on the project topic:
The problems of banking system in Nigeria
Chapter one serves as an introduction of the topic, which ex-rayed
issues likes: Background of the study, statement of the problem, purpose or
objective of the study, significance of the study and limitation of the study.
Chapter two is purely based on the review of related literature 1
used in the course of my study.
Chapter three dealt on research design and methodology, that is
sources of my data secondly source only location of the data and method used in
collecting data, literature work only.
Chapter four is purely based on the summary of my findings.
Chapter five is my recommendation and conclusion.
of the study
of the problem
/objective of the study
of the study
of the study
Review of related literature
2.1 Definition of a bank
2.2 Types of banks and their functions.
2.3 The role of banks in the National Economy
2.4 Types of problem facing commercial banking industry in
RESEARCH DESIGN AND METHODOLOGY.
3.1 Source of data (Secondary data only)
3.2 Location of data
3.3 Method of data collection (literature work only)
OF THE STUDY
Banking business started as far back as the seventeenth century.
When the receipts issued by Goldsmiths to depositors were used as a means of
exchange in commercial transaction. Because these receipts were accepted
generally, they became transferable too.
A bank is an institution where money and valuables are kept for
safety purposes. Bank also lend money known as loan, pay out money on the
customers order by means of a change and bank draft and also give over draft to
The structure of banks can be grouped into the following namely.
CENTRAL BANK This
is the apex financial institution which is charged with the responsibility of
managing the cost, volume availability and direction of money and credit in an
economy with a view to achieving some desired economic objectives.
This was established in March 1958 and started full operation by 1st July, 1959 which was after many
banks like West African Currency Board (WACB) in 1912, and the international
bank for Reconstruction and Development (IBRD) in 9155 failed to perform their
objectives, and they later folded up.
COMMERCIAL BANK: They are financial which carry out the ordinary
banking business of receiving deposits, advancing loan, discounting bill and
offering related services to the general public. This started in Nigeria in
1892 with the establishment of African Banking Corporation and folded up in
1893. Then British Bank of West Africa (BBWA) was established in 1893, started
operation in 1894 and later fold up too. Many other banks came into existence,
which equally folded up. This is classified into main group, which are as
INDIGENOUS BANK: These are banks fully owned and controlled by
Nigerian citizen including government. The first Indigenous bank in Nigeria was
the National Bank of Nigeria (NBN). Which started operation in 1933 followed by
African Continental Bank LTD (ACB in 1947.
MIXED BANK: These are bank jointing owned and controlled by
foreigners and Nigerian Citizens including government.
FOREIGN BANKS (EXPATRIATE BANK): These are bank fully owned and
controlled by the foreigners.
The Nigerian indiginization Act of 1972 converted most of these
foreign banks, which was later phased out long time.
However, the 1995 budget has reintroduced the foreign (expatriate)
trade in which banking system is an integral part of it.
MERCHANT BANK: This is a bank that specialize in providing who
engaged in whole sale banking, medium and long term financing, equipment
leasing debt factoring, investment management, acceptance bills and management
of unit trust. This was established in 1964.
DEVELOPMENT BANK: This is bank which specialize in providing long
term fund for industrial, agricultural, commercial and mortgage development.
Also, it helps entrepreneurs by providing loans and consulting
services to them. This is classified in the following groups namely.
NIGERIAN INDUSTRIAL DEVELOPMENT BANK (NIDB)
This was established in 1964 to replace the investment corporation
of Nigeria. This assists the public and private sector companies.
NIGERIAN BANK FOR COMMERCE AND INDUSTRY (NBCI) This was
established I 1973 to see to the financial implementation of the enterprises
promotion decree of 1973. This assists the indigenous businessmen.
NIGERIAN AGRICULTURAL AND CO-OPERATIVE BANK (NACB) This assists
the agricultural sectors individual farmer and co-operative bodies and is fully
owned by the federal government.
This was established in 1973 with a capital of twelve million
naira (N12 million).
FEDERAL MORTGAGE BANK (FMB) this is a bank established by the
government to help people build house by giving them long-term loans. The
customers pay back what they own the bank by mortgaging the land and house till
they finish what they are owing.
SPECIALIZED BANK: This is another types of bank which was
established by the government and it includes the following namely.
PEOPLES BANK OF NIGERIA: This is set up by the Nigerian government
in 1989 to help petty traders. They also provide loans in-group at no interest
rate but an administrative cost of fifteen percent (15%) of the loan.
COMMUNITY BANK: This is self-sustaining bank owned and managed by
a community or a group of communities to provide financial services to that
community. This was established in1990.
Banking system is the system at which banks operate. This is
divided into four groups namely.
UNTIL BANKING: This is a types of banking system where the bank
involved operate without branches. This is commonly found where commercial bank
BRANCH BANKING: This system relate to a situation where there are
few bank with a large number of branches. This then falling the readers that
the bank seen here operate with branches.
GROUP BANKING: This system is a situation where three more
independent banks are brought together under one control through the exercise
of majority share stock ownership.
Despite the creation of all these banks by the government to and
entrepreneurship development. The Nigeria banking system still encounters a lot
of problem, which has disrupted its operation in the country.
1.2 STATEMENT OF THE PROBLEM
The problem in a nutshell includes such practices as fraudulent
activities and mismanagement by bank officials poor, liquidity and
unavailability of adequate credits to deserving customers. The phenomenon
technically referred to as “Bank distress” has become a regular feature in the
Nigeria banking industry. It connotes the erosion in the capital base of the
enterprises, which is commonly traceable to indigenous banks.
Nigerians set up these banks as earlier mentioned with sole
objective of meeting the business needs of follow Nigeria. For insurance the
National bank, when established in1933, work towards catering for the interest
of Nigerian. Which aimed at assisting indigenous companies and individual who
were victims of the discriminating practices of foreign banks. These banks have
achieved a lot in the country since their inception irrespective a very serious
set backs caused by unco-operative attitudes of bank delfors and hard
regulatory polices as well as unpatriotic attitudes of the citizens.
1.3 PURPOSE OF THE STUDY
The purpose of this project is to identify and provide possible
solution to the problems in the Nigerian banking industry.
So, having identified the problems to which this study address
itself, the researchers shall in this work, make a critical insight into the
problems of banking system in Nigeria and determine the effects and reactions
of the situation on the following.
i) The profitability of the bank.
ii) Their reaction to the various policies of the
Central bank of Nigeria and Nigerian Deposit Insurance Corporation
to correct the irregularities.
iii) The overall impact of these two situations on the bank
existence and to their customers.
1.4 SIGNIFICANCE OF THE STUDY
It is of importance for banks and business organization to
know the cause of the
problem in the banking industry and the possible ways of solving them.
It will also aid most banks and business organization to realize
the need to encourage the growth in Nigerian banking industry. That our banks
should not be allowed to die having lived to their responsibilities.
The projects will also make Nigerians realize the need for hones
try, handwork and patriotism so as to encourage and inculcate banking habit not
only to the masses but also to the rural dwellers.
Also, this project will serve as material for future research,
economists and the economy of the country.
The terms used in this work needs to be defined to facilitate the
understanding of the reader. As one of the greatest Greek philosophers
Aristotle (348-322BC) would put it, he says, “Before a discussion can be
intelligible there must be a definition of terms.
Definition of bank or banker: It
can be defined as any person or corporation that provides the minimum banking
services and which is licensed as a bank by the federal government of Nigeria
as a banking institution.
Banking system is
the system at which bank operate.
TERMS AND CONDITIONS APPLY
For more informations on project materials and more