ASSESSMENT OF THE ROLE OF NDIC IN REGULATION AND SUPERVISION OF COMMERCIAL BANKS IN NIGERIA
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ASSESSMENT OF THE ROLE OF NDIC IN REGULATION AND SUPERVISION OF COMMERCIAL BANKS IN NIGERIA
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Ajayi (1991) describes commercial banks as “all-purpose retail bankers.” They mobilise deposits of all quantities and from all sources in both retail and wholesale markets. They mostly engage in borrowing and lending.
The lending activities of Nigerian commercial banks have gradually increased over the years, and the rate of increase has recently acquired a tempo that requires some explanation.
Bank management is the process of managing money and delivering a wide range of financial services. Beginning with management, it entails determining the ideal size and composition of a bank’s total assets and liabilities. Nwankwo, Nwankwo (1991).
Banking supervision strives to limit the possible risk of failure and guarantees that dangerous and unsound banking practises do not go unchecked, taking into account the NDIC’s supervisory and regulatory function on commercial banks with the goal of preserving consumer bank accounts.
Bank supervision is a supervisory duty tasked with safeguarding the overall safety and soundness of the banking system. Every licenced insured institution’s books and affairs are audited as part of its supervisory mandate. This function is carried out through off-site surveillance and on-site examination of the banks’ books and affairs,
with exceptions reported and recommendations made on how to correct the observed lapses, and the implementation of such recommendations is monitored through scheduled post-examination visits to the affected banks (Garcia, 1998).
Commercial bank supervision is a supervisory duty tasked with safeguarding the overall safety and soundness of the banking system. Regulation, on the other hand, include contributing to the development and interpretation of legislation and regulations, issuing guidelines, and approving requests from regulated financial institutions.
Bank commercial The NDIC’s supervision is handled by three departments: the Bank Examination Department (BED), the Insurance and Surveillance Department (ISD), and the Special Insured Institutions Department (SIID).
The BED and SIID conduct on-site examinations, as the titles suggest, while the ISD is in responsible of maintaining off-site monitoring over all insured banks.
Both on-site and off-site surveillance ensure that the covered institutions stay healthy at all times and that any problems are detected and treated as soon as possible.
Furthermore, supervision protects bank depositors, promotes competition among banks, and contributes to an efficient and orderly payment system (Ebhodaghe, 1991).
Following the recommendation of former Central Bank of Nigeria governor Ola Vincent, the Nigeria Deposit Insurance Corporation (NDIC) was founded on June 15, 1988,
to enhance the safety net for the newly liberalised banking system. In the newly liberalised banking sector, the NDIC serves as a safety net for depositors (Ebhodaghe, 1991).
The Nigerian Deposit Insurance Corporation (NDIC) is a parastatal of the Nigerian Ministry of Finance. The organisation is tasked with defending the banking system against instability caused by runs and a lack of depositor confidence. The Nigeria Deposit Insurance Corporation Act (1990) governs its operations.
The NDIC is a member of the Nigerian Financial Reporting Council. Although it answers to the Federal Ministry of Finance, the NDIC supplements the Central Bank of Nigeria’s (CBN) regulatory and supervisory responsibilities. The NDIC advises the CBN on distressed bank liquidation and oversees distressed bank assets until they are fully liquidated.
1.2 STATEMENT OF THE PROBLEM
Commercial bank regulation and supervision continue to be an important aspect of the system for guaranteeing safe and sound banking practises. The Central Bank of Nigeria (CBN) is at the apex of the banking industry’s regulatory and supervisory system.
The Nigerian Deposit Insurance Corporation (NDIC), on the other hand, shares supervision of insured banks with the Central Bank of Nigeria. These two agencies actively collaborate on both the focus and mode of regulating and overseeing insured banks.
This is demonstrated by the coordinated creation of supervisory policies and surveillance of insured banks’ activities, the reduction of supervisory overlap, and the establishment of a credible data management and information exchange system.
This study, on the other hand, focuses on the function of the NDIC in the regulation and supervision of commercial banks in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The following are the study’s objectives:
To investigate the NDIC’s role in the regulation and supervision of commercial banks in Nigeria.
To determine the cause for commercial bank regulation and supervision in Nigeria.
To assess the NDIC’s performance in regulating and supervising commercial banks in Nigeria.
1.4 RESEARCH QUESTIONS
What is the NDIC’s function in the regulation and supervision of Nigerian commercial banks?
What are the grounds for commercial bank regulation and supervision in Nigeria?
What is the NDIC’s effectiveness in regulating and supervising commercial banks in Nigeria?
1.5 HYPOTHESIS
HO: The NDIC plays no important role in the regulation and supervision of Nigerian commercial banks.
HA: The NDIC plays an important role in the regulation and supervision of Nigerian commercial banks.
1.6 SIGNIFICANCE OF THE STUDY
The following are the study’s implications:
The findings of this study will inform stakeholders in the banking industry, particularly commercial banks, as well as the general public, on the role of the NDIC in the regulation and supervision of commercial banks in Nigeria.
This study will contribute to the body of literature on the effect of personality traits on student academic achievement, forming the empirical literature for future research in the field.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
This research will focus on commercial banks in Edo State’s designated towns. It will also discuss the NDIC’s role in regulation and oversight.
STUDY LIMITATIONS
Financial constraint- A lack of funds tends to restrict the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection procedure (internet, questionnaire, and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
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