Banking in nigeria pdf

However, good corporate governance in this context obliges banks to operate in a way that is customer-friendly protecting the interest of the depositors , safe and sound. It requires banks to comply with applicable laws, rules and regulations as provided for by the over-all supervisory body in place. Thus, the importance of corporate governance of the financial institutions such as banks remains ever crucial. There was no doubt that along the line of history, the Colonial Banks established their presence in Nigeria.

They ran commercial affairs, affected financial activities, and influence trade and commercial transactions throughout West Africa, from Nigeria6. In , the British and French Bank for commerce and industry was established later to become the United Bank for Africa.

These banks therefore did not aim at meeting the needs of the Africans 8. He decided to establish the bank all in the name of Pan Africanism because foreign banks discriminated against him and his group of companies9. Nigerian Journal of Management Research at page In , its remains were replaced by Mercantile Bank most of its directors were also directors in the defunct ICB. A year later, it created branches in Lagos and Aba, but six years later, it also went into voluntary liquidation.

In , the Nigerian Farmers and Commercial Bank also came into existence. Worried by the spate of establishment of these indigenous banks, the Government in , appointed Mr. Its report of this inquiry submitted in , formed a foundation for the establishment of the first Banking Ordinance Act that same year. It was designed mainly to ensure orderliness in commercial banking, and prevent the establishment of unviable banks and unregulated banking transactions Draft legislation for the establishment of Central Bank of Nigeria was presented to the House of Representatives later in March, It was passed and fully implemented on the 1st of July establishing the full operation of the Central Bank of Nigeria.

Oxford Clarendon Press, at page New deposit-taking financial institutions became a norm as a result of financial sector reforms. There were numerous establishments of community banks, finance and short loan houses. In , the government established Nigeria Deposit Insurance Corporation NDIC 16 with the responsibility of carrying out some sort of financial reforms and assisting the Central Bank of Nigeria in formulation of policies.

It was charged with the responsibility of ensuring safe and sound banking services and insuring bank deposits through effective supervision.

This is because the term is wide, and has an extensive scope, cutting across various art or social science fields, especially in law, economics and political science. Therefore, one can safely submit that a general understanding of banking regulations as far as Nigerian Banking system is concerned is more statutory rather than financial.

Kahn19 taking a position on the concept of regulation sees it as "direct governmental prescription of major aspects of their structure and economic performance He successfully highlighted four inter- related category that sums up the concept of regulation as far as banking is concerned. As good as these economic perspectives it sounds, they were seriously criticised by a chore economic positivist 19 See Kahn, A. Volume 2, No 1 1st edition at Pages Massachusetts,London, England.

The Nigerian Banking sector is primarily regulated by two bodies. The first is. These bodies, are used by the government to regulate and supervise the Banking sector.

They are set up through an Act of Parliament to regulate and control financial activities and monitor actors within the Nigerian banking system. Thus, CBN is seen as lender of last resort to all banks in the nation.

The NDIC also has a supervisory role, which it performs by protecting the depositors and their deposits in banks, ensures monetary and transfer stability, supports, and encourages an efficacious payment system, making sure that dodgy, unsafe and unsound banking practices does not occur, and where it occurs, it must be checked for prevention of future reoccurrence.

The NDIC has three ways in which it supervises the banking system a transaction-based supervision, b risk-based supervisions and c consolidated supervisions There are also external auditors, often from private companies, providing periodic audits of the financial books and records of the banks. However so important and strategic the roles of banks are in the economy of a nation, these have somewhat been far-fetched in developing countries, especially in Africa and most particularly, Nigeria the… Expand.

Save to Library Save. Create Alert Alert. Share This Paper. Background Citations. Citation Type. Has PDF. Publication Type. More Filters. The need for financial institutions anywhere in the world cannot be over-emphasized. The daily business transactions carried out by individuals, firms and corporate entities underscores the need for … Expand.

The consequences of the global financial crisis of emphasised the centrality of the banking system to not only economic sustainability, but also the contributions of a robust corporate … Expand. Acta Universitatis Sapientiae, Economics and Business. The recharge phone class was offered when and how to receive their cheque books, credit and debit by seven institutions, out of which four two and one were in cards.

The recharge phone class was offered by seven institutions, out of which four two and one were all 2. Type of Electronic Banking in the low, medium and high patronage levels, respectively. The master card class was offered by seven institutions, out of 5. Telephone Banking which six institutions experienced low patronage and one These are banking services which a customer of a financial institution was in the medium patronage level.

Services rendered 7. Origin of Electronic Banking in Nigeria through telephone banking include account balance funds Conventional banking system started in Nigeria in Since transfer, change of pin, and recharge phones and bills then, the industry has witnessed a lot of regulatory and payment.

The industry was being controlled by at Telephone Banking is a service provided by a financial most five out of the 89 banks in existence before the institution which allows its customers to perform transactions commencement of the ongoing banking industry reformation over the telephone.

Multiple branch systems is also one of the Most telephone banking uses an automated phone answering notable features of Nigerian banks, with a total of 89 banks system with phone keypad response or voice recognition accounting for about bank branches nationwide as at capability. To guarantee security, the customer must first As well, the industry is faced with heavy challenges, authenticate through a numeric or verbal password or through including the overbearing impact of fraud and corruption, security questions asked by a live representative.

With the erosion in public confidence, a poor capital base, persistent obvious exception of cash withdrawals and deposits, it offers cases of distress and failure, poor asset quality, and so on. P virtually all the features of an automated teller machine: art of the moves to resolve these lingering problems include account balance information and list of latest transactions, the banking reform initiated by the Central Bank of Nigeria in electronic bill payments, funds transfers between a customer's June , which is largely targeted at reducing the number of accounts, etc.

In addition to the self-service the quality of their service delivery, Nigerian banks have no transactions listed earlier, telephone banking representatives doubt invested much on technology; and have widely adopted are usually trained to do what was traditionally available only electronic and telecommunication networks for delivering a at the branch: loan applications, investment purchases and wide range of value added products and services.

They have redemptions, cheque book orders, debit card replacements, in the last few years transformed from manual to automated change of address, etc. Banks which operate mostly or systems. Unlike before when ledger-cards were used, today exclusively by telephone are known as phone banks.

Electronic Card transactions. Developments at home, such as the introduction An electronic card is a physical plastic card that uniquely of mobile telephone in and improved access to personal identifies the holder and can be used for financial transactions computers and Internet service facilities have also added to on the internet, automated teller machine ATM and point-of the growth of electronic banking in the country.

However, sales Pos terminal, to authorize payment to the merchant whereas local banks most commonly practice real time online seller. The various types of electronic cards includes debt, intranet banking, the integration of customers into the process credit cards, releasable cards require visiting banks for is far from been realized.

Many of the reasons are attributed to replenishment, debit cards are linked to local bank accounts the high prevalence of Internet fraud and lack of an adequate and offer immediate confirmation of payment while credit line regulatory framework to protect the banks from the volatility and can be used for are linked to a credit line and can be used of risks associated with Internet banking, especially at the for accessing local and international networks and were levels of communication and transaction.

In the main, Nigeria widely accepted in most countries, the underlying is globally regarded as the headquarters of Advance Fee Fraud infrastructure and operational rules are often provided by which is perpetrated mostly via the Internet. Electronic global trusted schemes such as visa and master card in banking is not one technology, but an attempt to merge addition to local lines. Debit cards are the dominant card several different technologies. Each of these evolved in mechanism in Nigeria, they are also known as ATM cards and different ways, but in recent years different groups and ATM usage is wider than Pos transactions given the current industries have recognized the importance of working limited deployment of Pos terminals.

Bankers now see a kind of revolution going on in There were five classes of services in this category namely, their business in part because we have taken a quantum leap in releasable card, debit card, naira credit card, visa card, master the use of technologies in the last several years.

Since its medium, while five were in the high patronage class. Until , a small number of banks operated their 8. Tope: [30]. In addition, the fact that banking system using a phone line. Internet usage in the country has been abused by cyber- Online services started in New TV monitor to access the criminals makes its window unattractive for domestic banking banking system using a phone line.

Because of the commercial failure of video evidences that the world over, dubious Nigerians use fake text, these banking services never became popular except in bank websites to scoop funds from unsuspecting victims. In France where the use of video text minitel was subsidized by some cases, these crimes are committed using existing bank the telecom providers and in UK where the Prestel system was sites. The precursor for modern Home Online Banking services were the distances banking service over the 8.

Its development and spread follows the path of the Online services started in New TV monitor to access the developments in information technology.

At inception, postal banking system using a phone line. Because of the commercial failure of video From the late s following the introduction of computers text, these banking services never became popular except in and Internet, crimes became prevalently perpetrated France where the use of video text minitel was subsidized by through the use of e-mail and other Internet means.

The latest the telecom providers and in UK where the Prestel system was dimension taken by the perpetrators of this crime is the use of used.

The country is currently rated as 8. Benefits of E-banking having one of the highest records of Internet frauds in the According to Aleen Greenspan , the expected benefit of whole world. According to the National Consumers League e-banking consists of the following, in the following order: , the country is the third highest ranked in Internet 1. As was reported in one of the national banks provide new, faster and better service to its newspapers, frauds and forgeries in Nigerian banks as at June customers, thereby, bringing up the banks to international stood at or N1.

There is even global suspicion that a verification within minutes, etc. Nigerian crime syndicate that coordinates global crimes such 2. Reliability of transaction: Electronic banking helps to as money laundering, bank fraud and scams exists today. Several factors are responsible for the above situation.

They 3. Satisfy: Electronic banking technology ensures the safety include inordinate tolerance for corruption among Nigerian of bank dealing with its customers. This banking terms of professional values and ethics; chronic technology electronic banking prevents this through its unemployment among graduates, and the widening gap signature verification preventing unauthorized access into between the few rich and the many poor caused mainly by bad the computer.

In the main, erosion of good value principles and 4. Redundancy of Storage Space: Electronic banking corruption constitute the greatest cause of rising cyber-crimes technology helps to reduce the use of files which are among Nigerians.

This, according to Transparency archaic, thereby, reducing use of storage space. International, is worsened by fact that several generations of The use of file could lead to loss of vital information about Nigerians have been raised in this norm. Hence, what is seen bank customers either by mutilation or easy and unauthorized as a dangerous global crime is socially acclaimed and access to file and also misplacement of important documents. This can be prevented through storage of information in hard The above situation constitutes the environment upon which drive, diskettes and compact disc.

Internet banking has emerged in Nigeria. In effect, it is this projection that has raised capable of constraining the practice and development of pertinent regulatory questions concerning Internet banking, Internet banking Nigeria. One of such areas, for instance, is especially in Internet fraud-infested countries like Nigeria. One key issue here borders on how to handle the rising level While acknowledging that the existing regulations would of frauds and forgery prevalent in the entire banking system; apply wholly on electronic banking, section 4.

The Guidelines also 8. The Guidelines of , and the Money Laundering Decree of By the late s, following of ordinary domiciliary accounts, and conform with all other record growth in Internet and computer usage in the country, foreign exchange regulations. It failed to explicitly recommend trend.

Not even a mention of electronic banking or any a standard that allows banks to examine potential threats that manner of its application was mentioned in any of those may already be in existence in each individual financial prevailing regulatory documents.

The situation created a lot of institution's current network. This at the same time proper Internet framework is also queried amidst the poor made the banks vulnerable to all kinds of risks, including state of basic information technological infrastructure in the transaction, strategic, reputation and foreign exchange risks. This is essentially necessary since e-banking This deficiency notwithstanding, it was not until when generally relies on the existence of adequate operational the maiden guidelines on electronic banking came into force.

Though little success has been recorded, the supply of a Technical Committee on Electronic Banking set up by the of these requisite facilities is very erratic in the Nigerian case.