THE PROBLEM OF BANKING SYSTEMS IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
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.
1.2 BACKGROUND 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 customers.
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 follows.
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.