THE IMPACT OF REGULATION AND SUPERVISION ON THE
ACTIVITIES OF BANKS IN NIGERIA

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Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

Note:  We accept bank transfer, ATM cash transfer , Online payment using your ATM , Western union bank transfer.  We will respond to you anytime of the day. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OKEKE CHIDI C ON :  08074466939,08063386834.

AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO

08074466939 or 08063386834, YOUR PROJECT TITLE  YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.

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ABSTRACT
The study is an empirical analysis of the impact of regulation and supervision on the activities of
Nigerian banks with emphasis on the role of the Central Bank of Nigeria and The Nigerian
Deposit Insurance Corporation. It evaluates the roles and contributions of CBN and NDIC to the
Nigerian banking sector. Extensive field survey and library research was carried out and data
collected were subjected to thorough analysis.
The analysis shows that the supervisory and regulatory framework of the Central Bank of Nigeria
and the Nigerian Deposit Insurance Corporation are not sufficient to guarantee effective
banking practices in Nigeria.
Other findings from the study include the need to increase the maximum insurance coverage
due to the effect of inflation and the persistent fall in the value of the Naira, the need to disclose
transactions continuously to ensure financial prudence through regular supervision and
monitoring of the financial health of local banks with the aid of the ‘CAMEL’ ratings and other
supervisory framework.
There is need to also increase the awareness of banking activities within the general populace
through a deliberate integration process aimed at demystifying certain inherent perceptions of
the public with respect to distress and the role of the Nigerian deposit Insurance Corporation
(NDIC). Moreover, the public, investors and depositors were not fully aware of the activities of
NDIC and CBN in liquidating and revocation of banks’ licenses due to the ineffectiveness of the
enlightenment programmes used in carrying out the awareness.
The study focuses also on the consolidation agenda of the Central Bank of Nigeria and the
processes, prospect and the challenges of consolidation.
A questionnaire and telephone based research was adopted for the study and the data
collated was tested using the chi-square analysis and supported by fundamental evidence from
the database of the regulatory authorities.
Finally, the study offered suggestions as to how the problems so identified could be ameliorated.

CHAPTER ONE: INTRODUCTION
1.1.0 Background of the Study 11
1.2.0 Aims and Objectives of the Study 13
1.3.0 Scope and Limitations 14
1.4.0 Significance of the Study 15
1.5.0 Statement of Research Problems 16
1.6.0 Statement of Research Questions 16
1.7.0 Research Hypothesis 18
1.8.0 Definition of terms 20
CHAPTER TWO: LITERATURE REVIEW
2.0.0 Introduction 22
2.1.0 Introduction to Banking Supervision & Regulation 23
2.2.0 Development of Banking in Nigeria 30
2.3.0 The objectives for banking Supervision 33
2.4.0 Approaches to Banking Regulation and Supervision 36
7
2.5.0 Banking Supervision and Regulatory Structures 38
2.6.0 Ways and Methods by which Regulatory authorities
Carry out supervisory functions in banks 41
2.7.0 Procedures and areas of banking examination 43
2.8.0 Origin of Bank regulation/Supervision in Nigeria 45
2.9.0 Conditions for effective banking supervision 47
2.10.0 The roles of Regulatory Authorities in Banking 49
2.11.0 The agents of banking Supervision Authorities and
Authorities 54
2.12.0 Challenges of Supervision 91
2.13.0 The Nigerian Deposit Insurance Corporation 114
2.14.0 The Impact of Public Policy on the Banking System in
Nigeria 135
2.15.0 Banking Sector Policies in Nigeria 137
2.16.0 The Performance of Public Sector Banks in Nigeria 140
2.17.0 The Impact of Financial Liberalisation on Banking 152
2.18.0 Recent developments in the organization of banking
Supervision 155
2.19.0 Bank consolidation in Nigeria: Processes and Prospects 162
2.20.0 Supervision of Restructured banks 184
2.21.0 Assessment of Compliance with the Basle Core Principles 186
CHAPTER THREE: RESEARCH METHODOLOGY
3.0.0 Introduction 204
3.1.0 Research Design 204
3.2.0 Sources of data & Instruments of data Collection 207
8
3.3.0 Research Instruments 209
3.4.0 Research Population 211
3.5.0 Determination of Sample size 212
3.6.0 Administration of Questionnaires & Interviews 213
3.7.0 Methods of data Analysis 214
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1.0 Data presentation 216
4.2.0 Data analysis 216
4.3.0 Hypothesis Testing 238
CHAPTER FIVE: DISCUSSION OF RESULTS
5.0.0 Introduction 261
5.1.0 Findings 261
CHAPTER SIX: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
6.0.0 Summary of Findings 264
6.1.0 Conclusion 264
6.2.0 Recommendations 266
Bibliography 267
Proposed Research Questionnaire 278
9
CHAPTER ONE
INTRODUCTION
10
1.1.0 BACKGROUND OF THE STUDY
The banking sector in any economy serves as a catalyst for growth and development. Banks are
able to perform this role through their crucial functions of financial intermediation, provision of
an efficient payments system and facilitating the implementation of monetary policies. It is not
surprising therefore, that governments the world over attempt to evolve an efficient banking
system, not only for the promotion of efficient intermediation, but also for the protection of
depositors, encouragement of efficient, competition, maintenance of public confidence in the
system stability of the system and protection against systemic risk and collapse.
Worldwide, the banking business is highly regulated. This is because of the pivotal position the
financial industry occupies in most economies. An efficient system, it is widely accepted, and is
a sine qua non for efficient functioning of a nation’s economy. Thus, for the industry to be
efficient, it must be regulated and supervised in view of the failure of the market system to
recognize social rationality and the tendency for market participants to take undue risks which
could impair the stability and solvency of their institutions.
Regulation and supervision of banks remain an integral part of the mechanism for ensuring safe
and sound banking practice. At the apex of the regulatory and supervisory framework for the
banking industry is the Central Bank of Nigeria (CBN). The Nigerian Deposit Insurance
Corporation (NDIC) however, exercises shared responsibility with the Central Bank of Nigeria for
the supervision of insured banks. Active co-operation exists between these two agencies on
both the focus and modality for regulating and supervising insured banks. This is exemplified in
the coordinated formulation of supervisory strategies and surveillance on the activities of the
insured banks, elimination of supervisory over lap, establishment of a credible data
management and information sharing system.
In the main, bank supervision entails on-site examination of the institutions and off-site analysis of
periodically rendered prudential returns, a process called off-site surveillance. The two activities
11
are mutually reinforcing and are designed to timely identify and diagnose emerging problems in
individual banks with a view to prescribing the most efficient resolution options.
In line with prevailing international standards, these agencies (CBN and NDIC) have continued
to emphasize risk-focused bank supervision in Nigeria. Similarly, they have developed twenty-five
(25) core principles for effective banking supervision as enunciated by the Basle committee on
banking supervision as the pivot of the framework for bank supervision.
It is worthy to note that what is currently happening in Nigeria does not differ widely from what
happened in other nations. Over the years, and specifically since 1952 when the first banking
ordinance was promulgated, several other statutes have also been put in place to serve as
legal backbone for the actions of the monetary authorities in regulating the banking industry.
Presently, the major relevant statutes, include Central Bank of Nigeria Decree No 24 of 1991, the
Banks and other financial Decree No. 25 of 1991, the Company and Allied Matters Decree No 1
of 1990, the Nigeria Deposit Insurance Corporation Decree No 22 of 1988 and lately, the failed
Bank (recovery of debt & Financial malpractices) Decree No 18 of 1994. These enabling laws
and other relevant legislation have largely provided for sufficient and comprehensive
supervisory power and operational autonomy in bank supervision, which may restore public
confidence in banks.
Furthermore, as part of efforts to ensure the stability of the banking industry and in response to
the lingering problem of distress in the sub-sector, the regulatory/supervision authorities have
been applying various failure measures since the late 1990s. Hence depending on the severity
and peculiarity of the distress, NDIC in collaboration with the CBN, has over the years,
successfully adopted such measures as provision of liquidity support through accommodation
bill, imposition of prompt corrective actions, assumption control and management, restructuring
and sale of some distressed banks as well as liquidation of the terminally distressed banks as a
last but unavoidable option.
12
In specific terms, the following measures have so far been adopted.
1) Accommodation facilities were granted to ten (10) banks with serious liquidity crises to
the tune of N2.3 billion in 1989 following the withdrawal of public sector funds from
commercial and merchant banks and the transfer to CBN during that year.
2) Holding actions were imposed on 46 banks to help stabilize their financial conditions in
the mid-90’s.
3) Twenty – four (24) banks were temporarily taken over by the regulators to safeguard
their assets between the years 1989 – 1994.
4) Seven (7) distressed banks were acquired, restructured and sold to new investors in
the late 1990’s.
5) From 1994 to 1999, thirty-six (36) terminally distressed banks were closed with minimal
disruption to the banking system.
6) In 2005, the number of operationally licensed banks in Nigeria numbering 89 (Eighty-
Nine) was streamlined through a process of Mergers and acquisition into 25 (Twenty-
Five) viable banking institutions with a capital base of not less than N25 billion each.
The streamlining of these banks was because of their inability to respond to all the various
regulatory/supervisory initiatives employed to resolve the banks’ problems, and the continued
degeneration in their financial conditions.
1.2.0 AIMS/OBJECTIVES OF THE STUDY
The general aim of this research work is to determine the impact of the regulatory and
supervisory functions of the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance
Corporation on the activities of Nigerian banks.

Impact of Automated Teller Machine on Bank Customers Satisfaction in Banks

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Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

Note:  We accept bank transfer, ATM cash transfer , Online payment using your ATM , Western union bank transfer.  We will respond to you anytime of the day. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OKEKE CHIDI C ON :  08074466939,08063386834.

AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO

08074466939 or 08063386834, YOUR PROJECT TITLE  YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.

WE HAVE SECURITY IN OUR BUSINESS.   

MONEY BACK GUARANTEE

 

 

CHAPTER ONE

INTRODUCTION

1. Background of the Study

Automated Teller Machines (ATM) are devices used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. The strip contains an identification code that is transmitted to the bank’s central computer by modem. To prevent unauthorized transactions, a personal identification number (PIN) must also be used by the user using a keypad. The computer then permits the ATM to complete the transaction; most machines can dispense cash, accept deposits, transfer funds, and provide information on account balances. Banks have formed cooperative, nationwide networks so that a customer of one bank can use an ATM of another for cash access, by extension all commercial bank’s ATM in Nigeria are inter-connected (Okoh, 2010).

 

Globally, Automated Teller Machines (ATMs) have been adopted and are still being adopted by banks. They offer considerable benefits to both banks and their depositors. The machines can enable depositors to withdraw cash at more convenient times and places than during banking hours at branches. In addition, by automating services that were previously completed manually, ATMs reduce the costs of servicing some depositors of demand. These potential benefits are multiplied when banks share their ATMs, allowing depositor of other banks access their account through a bank’s ATM (Andrews, 2003).

Banks have become the principal deployers of ATMs. Two reason for this are that they want to increase their market share, although due to the prevalence of ATMs, it is not likely to be the primary means by which ATMs increase profitability for most banks, or/and above a certain level of operations, the cost of a single transaction performed at an ATM is potentially less than the cost of a transaction conducted from a teller, as ATMs are capable of handling more transactions per unit of time than are tellers (Laderman, 1990).

 

In Nigeria the deployment of ATM by banks and its use by bank customers is just gaining ground and has burgeoned in recent times. This has happened especially after the recent consolidation of banks, which has in all probability, made it possible for more banks to afford to deploy ATMS or at least become part of shared networks (Fasan, 2007). The increased deployment of ATMs in the banking sector has made the issue of technology relevance important.ATM services have a history that is less than ten years in Nigeria. At first, they were operated as elitist services designed for those desirous of exclusive services. Cards were rare and the process for obtaining them tortuous.

 

Presently, the use of ATM cards has been widely promoted. Banks no longer appear to want personal contact with their customers. Some banks have resorted to penalizing the customer as it were, for not possessing an ATM card, by debiting the account of such a customer for withdrawing below a certain amount across the counters. Agboola (2006) reported that although only a bank had an ATM in 1998, by 2004, fourteen of them had acquired the technology.

Agboola (2006), discovered that the adoption of ICT in banks has produced largely positive outcomes such as improved customer services, more accurate records, ensuring convenience in business time, prompt and fair attention, and faster services etc. Also, the banks’ image is improved creating a more competent market. Work has also been made easier, and more interesting, the competitive edge of banks, relationship with customers, and the solution of basic operational and planning problem has been improved. Fananopo (2006) stated that Nigeria’s debit card transaction rose by 93 percent over pervious years owing to aggressive roll out initiatives by Nigerian banks, powered by interswitch network the number of ATM transactions through interswitch network had increased from, 1,065,972 in 2004, to 21,448,615 between January 2005 to March 2012.

 

This is a rise of 92.6 percent with respect to the pervious years. More than 1700 ATMs have been deployed on the network, while about 12 million cards have been issued by 18 banks as at March 2012.

A recent survey conducted by Intermarc Consulting Limited revealed that ATM services provided by Nigeria by banks and non-financial institutions stood as the most popular e-business platforms in Nigeria (Intermarc Consulting Limited, 2007). The report showed that awareness for various banking services rendered by Nigerian banks is mostly limited to the traditional banking services. The findings shows that 99% of the respondents were aware of savings account, while 92 where aware of current accounts and 72 percent are aware of local money transfer services. However, among the more modern banking services such as electronic banking, internet banking, point of sales (POS) transactions, money transfer, ATMS emerged as the most popular with 96 percent awareness level ATM awareness also ranked higher than awareness level about current accounts and slightly below savings account (Omankhanlen, 2007).

Hence, there is clearly a need to study the impact of automated teller machine (ATM) on bank customer satisfaction. It is against this background that the research sees the subject-matter worthy of investigation.

1.2     Statement of Problem

In recent times in Nigeria, customers of banks are no longer only concerned about safety of their funds and increase return on investments but demand efficient, fast and convenient services. Customers want a bank that will offer them services that will meet their particular needs and support their business goals at any given time, even after working hours. All these are only achievable through the use of ATMs.

Inspite of this laudable

Effectiveness Of Human Relations In The Banking Industry

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Note: our case study can be change to suit your desire location . we are here for your success.

                                   ORDER NOW

Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

Note:  We accept bank transfer, ATM cash transfer , Online payment using your ATM , Western union bank transfer.  We will respond to you anytime of the day. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OKEKE CHIDI C ON :  08074466939,08063386834.

AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO

08074466939 or 08063386834, YOUR PROJECT TITLE  YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.

WE HAVE SECURITY IN OUR BUSINESS.   

MONEY BACK GUARANTEE

 

CHAPTER ONE

Introduction

1.1Background of the Study

1. Statement of the Study
2. Objective of the Study
3. Statement of the Hypothesis
4. Significance of the Study
5. Scope and Limitation of the Study
6. Definition of Terms
7. Historical Background of the Study

 

CHAPTER TWO

          Literature Review

1. Concept and Development of Human Relations
2. Hainthorne Studies and Human Relations
   1. The Illumination
   2. The Relay Assembly Test Room
   3. The Interview Programme
   4. The Bank Wiring Observation Room
   5. The Final Stage
3. The Importance of the Hainthorne Experiment (Human relation)
4. The Effect of Human Relation to Management
5. Human Relation in Banking Industry
   1. Dimension of Human Relation in Banking Industry
   2. Qualities of Good Human Relation Practice in Banking Industry
   3. Principles of Good human Relation in Banking Industry
6. Limitations of Human Relations

 

CHAPTER THREE

3.1Research Design

3.2Research Population

3.3Sample Size and Sampling Technique

3.4Method of Gathering Data

3.5Justification of Methods Used

3.6Methods of Data analysis

3.7Justification of Instrument Used

CHAPTER FOUR

4.1Data Presentation

4.2Data Analysis

4.3Test of Hypothesis

CHAPTER FIVE

5.1Summary of Findings

5.2Conclusion

5.3Recommendation

References

Appendices

 

CHAPTER ONE

1. Introduction

Human Resource is a management approach that is aimed at understanding how psychological and social process interacts with the work situation to influence performance. Human relations are the first major approach to emphasize information work relationship and work satisfaction.

As global workplace becomes a reality, companies, both large and small require human resource. The oppressive nature or informal, email and mobile phone now ensures that a manager is continually fed with information. However, these are still no more than supporting tools in business life, helping to maintain good relationship created at more personal level. The reality is that successful businesses in the 21^st Century are still built around relationship founded on face to face meeting with customers, suppliers and employees.

For many, it is when they look at faces, before they know whether they should sign a deal, promote or take decision.

An organization is said to be a social system, where there is an interpersonal or inter-group, interaction aimed at increasing effectiveness at attaining organizational goals. Though these interactions may involve personal affairs, to a large extent, the interaction is related to the role expectations in group or in position occupied by sole occupant.

1.2   Background of GTB

Sincerely, Guaranty Trust Bank Plc was incorporated in July 1990, as a private limited liability company, wholly owned by Nigerian individuals and institutions. The bank was licensed as a commercial bank in August of the same year and commenced operations in February, 1991.

In September 1996, Guaranty Trust bank became a public quoted company, winning the prestigious president’s award in its first year on the stock exchange, and again in the year 2000. and 2003. Guaranty Trust Bank Plc held its public offer in 2001. This was over subscribed by 1.17% and is a testimony to the Bank’s viability as a profitable investment.

The Bank has over the years been committed to awarding excellent cash returns on shareholder investment, remaining one of the existing institutions in Nigeria that pays both interim and final divided each financial year.

Guaranty Trust Bank Plc obtained a Universal banking license in February 2002. The Bank’s reputation as an excellent financial service provider and its financial capacity to meet obligations as and when they fall due has led to a consistent appreciation of its risk asset rating. This currently stands at Tripple A, the highest rating on the Agusto & Co. Limited rating scale.

The Bank is today recognized as one of the most professional and profitably run banks in Nigeria. From a start-up capital of 25 million in 1991, the Banks shareholders funds have grown to over 11.7 billion, with an asset based over 160 billion. Annual revenues of 18 billion

Guaranty Trust bank started based on three fundamental aspirations:

• Exceptional customer service
• Excellence and superior financial returns
• Creating role model for society.

Values

• Learning organization
• Professionalism and service excellence
• Commitment to excellence financial returns
• Unique culture

Other Subsidiaries

1. Guaranty Trust Bank Gambia Ltd with 78% shareholding
2. Guaranty Trust Bank Sierra Leone Ltd with 87% shareholding
3. Guaranty Trust Bank Ghana Ltd with 78% shareholding
4. Guaranty Trust Assurance with 94% shareholding
5. GTB Register Ltd with 99% shareholding.

 

Ownership Structure

The shareholding structure of GTBank is spread amongst a group of corporate and individual investors who possess complimentary strength totally committed to the long term corporate vision of the bank to become a role model in the banking industries, such as one of Nigeria’s largest and most profitable bank and as a well respected west African (WA) financial service player.

Shareholders fund of N39 billion ($300 million) and market capitalization in excess of N149 billion ($1.17 billion) balance sheet size N493 billion ($ 3.79 billion).

Operating Structure

GTBank has over 100 business locations in Nigeria with 6 regions across the country, namely.

• North West
• South West
• South East
• North East
• Abuja North Central
• Lagos

Each region is headed by a Regional Manager who act as the CEO of the region.

 

Banking Services

GTBank provides a full range banking services, which include personal and corporate savings, account fund transfer, foreign exchange services, loans and advances, treasury functions and deposit, issuance of advance payment services, guarantees and performance bonds, collection services and correspondent banking services. The bank is fully equipped with latest technology in all its branches and it operates online services.

 

1. Statement of the Problem

The choice of this topic “Human Relation as a Tool for Effective Management in the Banking Industry” is to look at the organization and its management perspective in terms of Human Relations.

Basically, human resource had

A CRITICAL ASSESSMENT OF THE SURVIVAL STRATEGIES OF DEPOSIT MONEY BANKS IN A DEPRESSED ECONOMY WITH SPECIAL REFERENCE TO THE FIRST BANK OF NIGERIA PLC

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COMPLETE PROJECT  MATERIAL COST 2500 NAIRA OR $10 , WITH THE SOFTWARE 30,000 NAIRA

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Note: our case study can be change to suit your desire location . we are here for your success.

                                   ORDER NOW

Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

Note:  We accept bank transfer, ATM cash transfer , Online payment using your ATM , Western union bank transfer.  We will respond to you anytime of the day. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OKEKE CHIDI C ON :  08074466939,08063386834.

AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO

08074466939 or 08063386834, YOUR PROJECT TITLE  YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.

WE HAVE SECURITY IN OUR BUSINESS.   

MONEY BACK GUARANTEE

 

 

CHAPTER ONE

 

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Nigerian economy is faced with national and global economic challenges and as such, the financial institutions, especially the banking sector has an option of sanitizing and restructuring its operational processes in order to survive the depressed economy, as well as embarking on a consolidation exercise which would have some wider structural effects on the industry and on the economy as a whole.

Basically, banking is a service industry operated by human beings for the benefit of the general public while making returns to the shareholders.  As such, it is natural that the services provided thereof by the industry cannot be 100% efficient; however, there is always a room for improvement.  It is on this statement that the index of our further discussion on this study is based.

The banking sector in the third world economies has been grossly under managed when compared with their counterparts in the developed countries of the world.  This has made it imperative for Nigerian banks to sanitize and restructure their operational processes so as to be in line with the global trends, and to survive the depressed economy.

Before the introduction of Structural Adjustment Programme (SAP) in 1986, the banking sector was characterized by few banks.   The operators of these banks had almost total control of the business of banking as customers had to look for their services which most of the times were of poor quality.  The managers, because of the pressure to provide banking services, had little time to market their bank services or design new products to improve their customers’ service and at the same time, they received changes based on the approved tariff.  Competition was minimal and customers could spend long hours trying to obtain service in the banking hall due to long queues.

The quality of the bank staff was poor.  They were rude to their customers and most of the time; they felt they were doing a favour to their customers.  As at that time, no Nigerian bank had neither a simple computer nor a network of computers for online banking.  In the area of credit appraisal,  Ezeikpe (1993) observed that they were two conservative in extending credit facilities.  The system was highly under banked while the payment mechanism was filled with imperfection such that locally drawn cheques took more than one week to clear.

However, with the introduction of Structural Adjustment Programme (SAP) and its policy of deregulation and liberalization, some structural reforms were ushered into the banking sector.  By this policy, direct management and rigid controls in banking and security business by the government were de-emphasized for a broad based and private sector driven process.  Laws inhibiting competition were removed to ensure that banks are reasonably sound, competitive and efficient.

The traditional reforms were aimed towards achieving the following objectives:

1.       A strategy for competition.

2.       A sound organizational structure and effective management to support the strategy.

3.       To ensure management of critical financial and operating risks in banking.

4.       A system for planning, budgeting and measuring performance.

5.       Entrenching a programme for human resource management.

6.       Ensuring a strong and effective internal control.

7.       Putting in place the most appropriate Information Technology (IT) to automate the process.  Without any doubt, this policy was geared towards enabling banks to respond flexibly to monetary conditions and to facilitate an effective mechanism for transmitting the effect of monetary policy to the real sector.

The policy of liberalization ushered in an era of bank proliferation and reduction in professionalism. Investors rushed into banking business with about the same zeal with which they embraced contracts during the oil boom era of the 1970s.  In no distant time, signals of distress started manifesting in the banking sector by way of liquidation.  Some factors were identified as the causes of the distress that besieged the banking system.  These factors included:

1.       Under capitalization which made the capital structure of some of the banks to be inconsistent with their risk asset profile.

2.       No clearly defined lending policies and credit appraisal techniques.

3.       Unprofessionalism in the conduct of bank staff.

4.       High incidence of bad debts and non-performing facilities.

5.       Boardroom squabbles and undue interference of the board in the day-to-day management of the bank.

6.       Poor staff quality which arose due to the absence of retraining, and giving lip service attention to human premium.

7.       Incompetent management.

8.       Conflict of interest and insider abuse.

9.       Policy problem or delay and inadequate institutional arrangement and structures on the part of the regulatory authority before implementing policy changes thereby creating unhealthy and avoidable suspense and uncertainties.

10.     Inadequate prudential regulation and framework for credit classification.

11.     The sudden withdrawal of public sector deposit from the banking system to Central Bank in June, 1989.

12.     The epileptic stabilization securities and their lack of clear guidelines or modalities with respect to timing, mode of computation and amount

          The list is almost unending but one can observe from the above that apart from the last four (4) points which are externally induced stock, the rest are problems that can be controlled with appropriate in-built mechanism of internal control in the individual banks.

In the face of all these problems and uncertainties, the option available for the system to have a better control of these factors is to sanitize the bank internally and externally for survival.  Aderingbe (1997) observed that “for Nigerian banks to remain relevant in the next century with the current incursion of technology and globalization of the world market, they have to learn how to sanitize their operations for survival.”  Also Elumelu (1998: 26-27) observed that “the recent N25 billion recapitalization of Nigerian banks has made banks to go into several arrangements for its continued relevance.  This has resulted into arrangements like mergers, acquisitions, take-overs, re-engineering etc.”

The issue of bank survival through restructuring and sanitizing does not exist only as a failure resolution strategy.   However, it can be adopted in solving so many operational problems of corporate organizations.  The financial service industry has applied it in many operational problems.  In acknowledging the strategies and its impacts in the banking sector, a world bank report in the United States of America shows that for the year 1992-’96, the banking industry accounted for 13% of mergers, acquisitions and other survival activities by number of institutions and 12% by dollar amount and ranked first

APPRAISAL OF THE ECONOMIC IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS

(A CASE STUDY OF DIAMOND BANK)

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CHAPTER ONE

1.1       BACKGROUND OF THE STUDY

                        Before the emergence of modern banking system, banking operation was manually done which lead to a slow down in settlement of transactions. This manual system involves posting transactions from one ledger to another which human handles. Figures or counting of money which should be done through computers or electronic machine were computed and counted manually which were not 100% accurate thereby resulting to human errors. Most bank then use only one computer in carrying out transactions which ameliorate the sluggish nature of banking transaction.

                        Nigeria do not embrace electronic banking early compared to developed countries. Nigeria adopted electronic banking system in the early 2000s.  During the introduction of electronic banking system, the use of raw cash was said to have bred corruption through the “cash and carry syndrome” usually linked with the swift movement of Ghana-must go” bags by some politicians. Such bags as some analyst say, are a major source of corrupt practices as dubious persons seeks to bribe their way to avoid been checked in some sensitive areas or places in a corrupt society.

                        Since electronic banking started in all Nigeria banks, it has been a woe for civil servants; checks show that some staff in establishments such as the national boundary commission for instance, are yet to receive their salaries for the previous months as efforts to electrically transfer salaries into their account have failed according to Ibrahim, D. (2009).

                        “One bank will tell you it has transferred your salaries but the supposed recipient bank will tell you it has not received anything leaving you even more confused”, says John, I. (2009). Olekah, J. (2009) while acknowledging the initial hiccups that dogged the system, advises stakeholders against being discouraged as such “teething problems” are normal.

                        James, A. (2009) a banker reported to vanguard annual report that “we should not destroy electronic-banking by looking at the negative aspects, we must strive towards perfecting it”. James, A. (2009) also says that the volume of data generated by the Government ministry Agencies is much making it a bit difficult for banks to cope, Mathew S. (2009) a worker says in his report to vanguard annual report on banks and cards that government should have done its home work “very well” before introducing the system, “they plugged us into a system they were not prepared for and the result is untold hardship visited on innocent people”.

            At this juncture, is good to know what e-banking is all about.

                        According to Anyawaokoro, M. (1999). Electronic banking is defined as the application of computer technology to banking especially the payment (deposit transfer) aspects of banking. He also defined electronic banking as a system of banking with an electronic communication network which permits on-line processing of the same day credit and debit transfers of funds between member institutions of a clearing system.

                        According to Clive, W. (2007) in his Academic dictionary of banking, electronic banking is defined as a form of banking in which funds are transferred through an exchange of electronic signals between financial institutions, rather than an exchange of cash, cheques or other negotiable instruments.

                        According to Omotayo, G. (2007) defines electronic banking as a system in which funds are moved between different accounts using computerized on line/real time systems without the use of written cheques.

                        According to Edit, O. (2008) in international Journal of investment and finance, electronic banking is defined as a system by which transactions are settled electronically with the use of electronic gadgets such as ATMs, POS terminals, GSM phones, and V-cards e.t.c. handled by e-holders, bank customers, and stake holders.

1.2       STATEMENT OF PROBLEMS

                        As earlier pointed out, there is delay in payment of cheques which lead to the adoption of electronic banking system. Adoption of electronic banking which suppose to ease banking transactions rather resulted to woes to customer. Most people complain of time wasted in banks. This occurs when there is power failure in banks resulting to slow down in operation.

                        Another problem that emerged was that banks do not have information backup to fall back on should there be any computer break down.

                        In investing in electronic banking, the country will need a large amount of financial resources in computer technology, obviously, the resource is in short supply in Nigeria, couple with high level of poverty. For an efficient functioning of electronic payment system, there must be