IMPACT OF BANKING REGULATION AND SUPERVISION IN NIGERIA COMMERCIAL BANKS
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IMPACT OF BANKING REGULATION AND SUPERVISION IN NIGERIA COMMERCIAL BANKS
ABSTRACT
Since the number of troubled banks has been increasing, the research effort is a plan that is vacant to focus on the study of the influence of banking legislation and supervision in Nigeria commercial banks.
This has resulted in increased obligations for the supervisory authority. The author believes that the time has come to assess if the possibility of establishing an effective banking regulation and supervision in Nigerian commercial banks is promising or discouraging.
However, other reports indicate that a study of the influence of banking legislation and supervision should be undertaken in conjunction with the supervisory legislative framework. A reference to the operational requirements and manner of supervision is required to be examined.
As a result, this research work might be deemed vital for workers or those seeking to enter the administration of any financial organisation.
Furthermore, data presentation and analysis will be used in this research work, which will include hypothesis testing using statistical tools such as percentage, graphical representation square, and table.
Copies of questionnaires will be distributed to Union Bank Plc staff for data collection, after which an interpretation will be made before drawing conclusions.
CHAPTER ONE:
INTRODUCTION (1.0)
Modern commercial banking in Nigeria has a long history. The collapse in the barter system of trade and the increase in financial transactions of the colonial government necessitated the establishment of a commercial bank for fund safekeeping and transfer.
It was for this reason that an African banking firm located in South Africa was invited to create a branch office in Lagos in 1892, but its existence was jeopardised by the trade downturn that rocked Lagos that year. In 1894, its operations were taken over by the Bank of British West African, which acquired the Bank of Nigeria and monopolised banking in Nigeria.
The Bardays Bank began operations in Nigeria in 1925, with other colonial banks joining later. The exercise of indigenization abolished the existence of expatriate banking in Nigeria; their existence was terminated due to some of the problems in the land at the time;
a review of the history of the development of banking regulation shows that a variety of law regulation and supervisory practise have been involved and that they substantially meet the objective of regulation; the current regulatory and supervisory framework approximate practise around the world and involve It also entails overseeing practically every area of a bank’s operations and policymaking.
These regulatory provisions and supervisory measures are backed up by the CBN’s broad range of enforcement powers. Over the course of the year, the CBN has addressed to banking issues.
Adoption of prudential rules on the basal risk-based capital need, stronger enforcement authority and power, and a more pragmatic approach to dealing with distressed banks are examples of such measures.
1.1 BACKGROUND OF THE STUDY
Union Bank of Nigeria Plc is one of Nigeria’s three largest commercial banks and a first-class commercial bank. Before 1836, the British West Indies colonial bank was fully established in that territory.
Parliament passed an Act in 1961 allowing it to operate in other British possessions. Lord Beaver chaired the committee in 1917. In the Gold Coast, the bank opened new branches in Lagos, Zaria, and Accra. The bank’s rise and growth were so quick that by 1920, three years after it began operations in Nigeria.
The bank had opened three additional branches in Port Harcourt, Jos, and Kano, bringing the total number of bank branches to fifteen. Also during this period (1916), they had expanded in assets and liabilities and were competing favourably with BBNA (British Bank of West African),
as both banks’ capital was at $200,000 apiece, while the paid up capital for colonial bank was $600,000 and $560,000 for BBWA. The revenue accounts for the banks and $220,000 BBWA. The colonial bank was absorbed by Barclays Bank in 1922 and renamed Barclays bank (Dominion, colonial and overseas) like her predecessor the BBWA,
the Barclay bank (DCO) became Barclays bank Nigeria limited and subsequently the grant Union bank of Nigeria Plc under a working arrangement between Union bank of England and some other international banks who had interest in the two banks.
1.2 STATEMENT OF THE PROBLEM
The financial landscape in Nigeria today has become quite lively as a result of the economic restructuring that has been ongoing since 1986. As a result, the banking business has become more complex and competitive.
As a result, the primary goal of this research is to shed light on the influence of banking legislation and supervision in light of the ever-changing financial environment. Some of our banking industries’ challenges are as follows:
(i) Commercial bank distress in Nigeria
(ii) The inherent flaws in the regulatory supervisory measure’s design and implementation.
(iii) The requirement for talks with possible operators during the formation process.
1.3 OBJECTIVES OF THE STUDY
A research study on banking regulation and supervision is timely and relevant at a time when the government is planning to divest its shareholding in banks and when the increase in the number of commercial banks has resulted in increased competition among banks as well as between banks and other institutions operating in the financial services industry.
This resulted not just in the availability of new financial instruments and products, but also in lower margins and earnings. Again, the number of distressed banks has increased,
implying additional obligations and concerns for supervisory bodies. It is hoped that, in addition to contributing to the current literature on the subject, this research study will accomplish the following:
(i) To talk about banking regulation and supervision in Nigerian commercial banks. In order to gain a better understanding of how the banking sector operates.
(ii) To identify and discuss various policy measures contained in regulatory decrees, as well as to demonstrate the need for a current decree.
1.4 THE SIGNIFICANCE OF THE STUDY
The establishment and operation of a comprehensive banking regulation and supervision in commercial banks reassures confidence in the banking industry, given the commercial banks’ current strong competitiveness and multiplicity of branches.
The study’s significance lies in the Central Banking Authorities responding to challenges in banks by conducting regular supervision and examination of banks as a means of maintaining surveillance on banking operations to ensure that banks comply with banking law and other directives stipulated by the monetary authorities.
Furthermore, professors at the Central Bank of Nigeria (CBN) will benefit from this research. It will open up new avenues for further study effort for corporate organisations and the general population at large.
1.5 DEFINITION OF TERMS
This study is intended to serve various classes of individuals; nevertheless, the research believes that not everyone will comprehend some of the important terminology used in this study; with this in mind, the following key terms are defined.
SUPERVISION OF BANKS
To guarantee that individual banks follow the law and operate within the defined monetary policy objectives, this is a matter of judgement and prudential analysis.
BANKING DIFFICULTY
This occurs when a bank fails to meet the balance sheet standard of having sufficient assets at market value to cover its liabilities.
INVESTEMNT
Taking away a bank’s shareholding in any corporate company.
REGULATION OF THE BANKING INDUSTRY
Banking control, in particular, regulations that are adjusted to perform appropriately or according to one’s needs.
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