CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The banking act of 1969 defined banking business as the business of receiving monies from outside resources as deposits, irrespective of the payment of interest and the granting of money loans and cheques, or the purchase and sales of securities for accounts of others or the incurring of the obligation to acquire claims in respect of loans prior to their maturity or the assumption of guarantees and other warranties for others.
In Nigeria, the banking business is being operated by the central bank of Nigeria (CBN) which acts as the apex bank commercial banks, merchant banks and of course the people’s and community bank established by various decrees promulgated by the federal military government.
Commercial banking actuates started in Nigeria in 1892 when the African Banking Corporation commenced its bank work in Lagos.
One of the basic roles of the central bank of Nigeria is the supervision and control of other banks.
One of the basic roles of the Central Bank of Nigeria is the supervision and control of other banks. In (1982) Hart brought his own view of definition of ank as a person or company carrying on the business of receiving monies and collecting draft for customers subject to the obligation of honouring cheques drawn upon them from time to time by customers to the extend of the amounts available on their current account.
The government through its agency the Central Bank of Nigeria regulates banks. This is to ensure that they render services to their customers in a manner consistent with safe banking operations and government financial policy.
Due to the need to effectively and efficiently mange depositors funds the task of managing a bank is entrusted with honors, reputable, and hard-working personnel amongst various function of bank management from among alternatives of a course of action.The banking act of 1969 defined banking business as the business of receiving monies from outside resources as deposits, irrespective of the payment of interest and the granting of money loans and cheques, or the purchase and sales of securities for accounts of others or the incurring of the obligation to acquire claims in respect of loans prior to their maturity or the assumption of guarantees and other warranties for others.
In Nigeria, the banking business is being operated by the central bank of Nigeria (CBN) which acts as the apex bank commercial banks, merchant banks and of course the people’s and community bank established by various decrees promulgated by the federal military government.
Commercial banking actuates started in Nigeria in 1892 when the African Banking Corporation commenced its bank work in Lagos.
One of the basic roles of the central bank of Nigeria is the supervision and control of other banks.
One of the basic roles of the Central Bank of Nigeria is the supervision and control of other banks. In (1982) Hart brought his own view of definition of ank as a person or company carrying on the business of receiving monies and collecting draft for customers subject to the obligation of honouring cheques drawn upon them from time to time by customers to the extend of the amounts available on their current account.
The government through its agency the Central Bank of Nigeria regulates banks. This is to ensure that they render services to their customers in a manner consistent with safe banking operations and government financial policy.
Due to the need to effectively and efficiently mange depositors funds the task of managing a bank is entrusted with honors, reputable, and hard-working personnel amongst various function of bank management from among alternatives of a course of action.
The ensure that these laid down rules and standard are maintained among other bank and to guarantee that depositors monies are effectively managed there is the need for inspection and examination for effective discharge of these functions the inspectorate division of the central bank has adopted an effective internal control procedures in order to give adequate coverage thorough inspection and examination this defined objective this is enhanced by selecting adequate man-power needs for this purpose. In the recent time the comparization and digitalization of various function of banks has helped in a no small measure to curb down the excesses of bank. Also bank have established internal audit unit (inspectorate divisions ) charged with the responsibility of overacting any anomaly transaction based on through inspection and examination of its account on short term basis.
1.2 STATEMENT OF PROBLEMS
In Enugu metropolis which is my case study some problems have been identified to have invaded the banking sector and these problem have limited the out put of banks thus preventing them from reeling its desired objective..
a. The incident of fraud is prevalent in almost all the bank in Enugu metropolis as well as other state. These metpracties are now detectable through adequate supervision and examination.
b. The cases of bad and doubt full debt is now very rampant among many commercial bank. This problem is not easily nautical by bank of finical but through effective suppression and examination such evil in the banking sector can be detected easily and arrested.
c. There is very reoccurring problems of bank managers granting loans above their discretion’s and power without adequate collateral’s and this has resulted in huge losses to banks and some are the courage of liquidation. But adequate inspection and examination has provided in elating solution to this ugly trend .
d. The fear of luguidation and frequent rationalization and or retrenchment in banking sector has created fear anxiety and job insecurity workers in the banking sector tend to indulge in many despicable acts to survive these rang days. But through inspection and through examination the problem can be take of some banks within Enugu metropolis had save several embossing situation emanating from franduienl practice.
1.3 OBJECTIVE OF STUDY
The purpose and objective for which thus study was designed to achieve are here under stated as follows.
a. To identify how inspection and examination can be of assistance towards effectuation management of banking sector within Enugu metropolis.
b. To determine the magnitude of bad debts resulting from loans issued to customers which have not been recovered and also whether adequate provisions for bad debt are made for such bad debts etc.
c. To inform bank management though inspection and examination ill efficacy of their banking system and operations and recommend possible are as of change .
d. To cheek and examine how bank management grant loans over their power limit or discretion .
Limit as approved by the management .
1.4 DEFINITION OF TERMS
1. Loan: this is a sum of money tent to the government domestic and foreign lending or being lent.
2. Budget estimate of problem future income and expenditure that made by a government similar estimate made by a business company.
3. Gazette: official periodicals with legal notices news of appointment promotions of officers and officials.
4. Cheques: is an order in writings drawn on a bank and payable on demand.
5. Examination: it examining or being examined it was found that the signature was not genuine the prisoner is still under being examined.