THE IMPACT OF THE 25 BILLION RECAPITALIZATION BY THE CENTRAL BANK OF NIGERIA ON commercial BANKS
THE IMPACT OF THE 25 BILLION RECAPITALIZATION BY THE CENTRAL BANK OF NIGERIA ON COMMERCIAL BANKS
INTRODUCTION TO CHAPTER ONE
The Central Bank of Nigeria is Nigeria's premier financial agency in charge of ensuring fiscal and monetary stability in the economy. The Central Bank of Nigeria (CBN) is headquartered in Abuja (FCT), with regional offices in Lagos, Kaduna, enugu, and Ibadan. It is on Opara Avenue in the Enugu zone.
The researcher's goal in this study is to learn about the effects of the CBN's B25 billion re-capitalization on commercial banks in Enugu state, Nigeria, as well as banks nationwide.
The researcher wishes to learn about the issues that have resulted in the new guidelines, as well as the steps that commercial banks can take to comply with the new regulations. The researcher also wants to discover if the CBN's new recommendations will help strengthen the banking system and the Nigerian economy.
1.1 BACKGROUND OF THE STUDY
The Central Bank of Nigeria (CBN) was formed in 1958 under the CBN legislation of 1958, which was repealed, reenacting the CBN act of 191 (decree No 24).
The act gave rise to the CBN, which was established with specific goals in mind, such as (i) issuing legal tender currency in Nigeria.
(ii) promoting monetary stability and a sound financial system in Nigeria, among other things.
Regulations from the central bank frequently take the shape of rules or directives, which is why it has been given the authority to:
(a) Issue directions through circulars from time to time requiring each bank to keep at all times in the form of cash reserves with the bank at its office a sum equivalent to a stipulated ratio of the bank deposit liabilities, etc. section 39 (i).
.b. Determine the minimum paid-up share capital of each category of banks, based on the president of the sovereign republic's suggestion. (1) Section 9.
It is managed by a management team that includes the bank's governor, deputy governors, and directors from several areas. The governor is a severable link between the board of directors and its actions and decisions.
1.2 A STATEMENT OF THE problems
In this section, the researcher concentrated on the effects of the central bank of Nigeria's (CBN) N25 billion re-capitalization (new directive) on commercial banks in Enugu and across the country.
The re-capitalization has the potential to produce the following favourable reactions or effects on commercial banks:
2. Mergers and acquisitions, as well as consolidation.
3. Increased professionalism.
4. Economic stability.
We restate that re-capitalization is a more to improve the capital basis and introduce multifunctional face into the business, according to CBN governor, Prof. Charles Soludo. This Day in History, January 4, 2005.
1.3 AIM OF THE STUDY
The following are the primary goals that inspired the researcher to pursue this topic:
a. To understand why the Nigerian Central Bank (CBN) issued such a mandate (N25 billion re-capitalization).
b. To learn how commercial banks in Enugu State and across the country would respond to the new directives.
c. Determine the implications of the new directives for commercial banks.
d. Will the re-capitalization benefit Enugu State and the Nigerian economy?
1.4 THE SIGNIFICANCE OF THE STUDY
The significance of this study is to achieve great success in contributing the little that the researcher can, if not a great deal, in expressing the impacts of the new directive (N25 billion re-capitalization) by the Central Bank of Nigeria on commercial banks, which will bring about immense knowledge and enlightenment with special reference to the banks in Enugu state.
This research, hopefully, would extend the reach of the employees and management of commercial banks in Enugu state. Also, provide a more visible contribution and upgrade to both the headquarters and other branches across the country so that everyone understands the benefits and impacts.
Conclusively, while the researcher limited the study to Enugu state and banks, the findings will be extremely beneficial to all commercial banks in Nigeria, as well as students performing comparable research on the same or related topics.
DEFINITION OF TERMS
IMPACTS: This is the policy's reaction or drive on financial transactions in the various levels of banks operating in the country.
RE-CAPITALIZATION: This is a policy majority implemented by the Central Bank of Nigeria (CBN) that results in a progressive shift in the country.
It is also the modest variances in bank capital bases, which can be higher or lower depending on CBN regulation.