TABLE OF CONTENT
CHAPTER ONE
1.1 banking services in Nigeria 6
CHAPTER TWO
2.1 Policies 17
CHAPTER THREE
3.1 Findings 24
Bibliography 28
CHAPTER ONE
INTRODUCTION
A bank could be described as a major financial institute; other such institutions include fiancé house, insurance companies, mortgage companies etc. The main function of those financial institutions is to provide financial support to those who are in need. Apart from this function, counseling, acceptance of deposits, provision of loans and advances and also providing safekeeping place for people valuables. Many banks play intermediary roles in the financial sector of the economy which focus primarily on the following
Banks could be classified into the following categories.
Obviously with an observers first contact with a developing economy, all these categories of banks play important roles in stimulating the economy. They deal with members of the public. Firstly, they all provide first information and investment advice to willing customers to spread banking services to the grass-root considering the fact that a greater percentage of the country’s population reside in the rural areas.
Development banks by implication tend to carry out their functions effectively because they diversify into specialized areas such as Agricultural and Industry. An example is the Nigeria Agricultural and commercial bank (NACB) and Nigeria Industry Development Bank (NIDB). Hence the development of the economy is stimulated through these agency functions.
In order to achieve their set out objectives all these banks rely on certain instruments and policies which include reserve requirements, stabilization of securities, interest rate policy (lending policy) exchange rate and foreign exchange management. Discount rate policy among others which in Nigeria a developing country are put in place and over seen by the government owed central bank.
Lending has over the years become one of the most important functions in banking operations. It provides money for investments which in turn yields turnover and increases the liquidity in circulation, due to this direct effect, it has on the economy and business development, it is being pursed in many developing countries where banks and their lending activities have been usefully integrated into government policy formulation in the national economic development process. In Nigeria for example, where majority of the population live in object poverty, funds are very difficult to come by either for investment purposes or otherwise.
Thus, the federal government finds it necessary and critical to interview in the formulation of bank lending policies.
Lending is giving something to someone else for use over a short period of time (in this case money with interest where being paid bank).
In the objective of lending activity, the banks in the country have come up with policy guidelines which basically provides the frame-work for dealing with loans and advances. Some of these policies are designed to have relevance to the interval constraints of each bank for instance, sector performance, deposit base, risks existing exposure while others are derwed mainly from the guidelines issued periodically by the central banks for control reasons and known as monetary and credit policy guidelines for each fiscal year. A lending policy if properly articulated could provide a guide for safe. Sound and profitable banking activities. If on the other hand, the lending policy is not properly formulated, it could lead to the banks liquidation. Irrespective of the amount of liquidity available in a bank, it may find it practically impossible to satisfy all the requests it lies for loans since the requests may outstrip available resources. The bank thus has to discriminate in its decision to lend. Such actions must however be based on objectives funds available for loans must be judiciously applied strictly along the banks policy guidelines. When the policy has been formulated, lending procedures evolves as check towards ensuring that the objectives it realized.Lending procedures which acts as checks towards making sure that the objectives of the policy guidelines are achieved includes.
Like any other operational procedures, these should not be breached in any way otherwise it could cause doubtful debts etc. Due to improper lending, most banks make prevision for bad debts but on the other hand, what is known as recovery procedure in savouning doubtful debts. They include the steps by steps action by this specialized unit either legal or other wise to this effect.
In summary, this tends to take critical appraisals at these lending policies and procedures for loan recovery. These policies and procedures for play important role in achieving a goal and effective banking system.
Banking services in Nigeria dates back in 1897 when the elder Dumpster company was engaged in the business of moving coins up and down the country. In the same year, African Banking Corporation was formed to provide banking services to elder Dumpster company. This bank failed in the same year and was over run by the bank of British west Africa. The National Bank of Nigeria Ltd was established in 1933 as the first indigenous bank, the Agbonmagbe bank was registered in 1943 and the African continental Bank was found in 1947 by late Dr. Nnamdi Azikiwe. This was as a result of the shoody treatment he received in one of the expatriate banks. Co-operative banks of western and Eastern Nigeria was established between 1984 and 1951.
Indeginisation of the Nigerian Banking system started ORJI LINDA N. AC/N2002/077 essentially and banking facilities in the economy. These credit facilities could be placed under two broad groups long term facilities and short term facilities. The former normally covering long term investment. Capital market investments, credit financing, self-employment, consumer credit etc. funds obtained are usually for either commercial purposes or for industrial development. In recent years, the major interest of loan seekers is earning of profits. Banks in their realization of the need to develop the economy, encourage the disbursement of loan. In aid or assistance of variable projects, such projects will either result in the expansion or development of firms and industrial corporations.
Transactions of businessman and other professionals are also not left out. In the need for liquid cash, which are sometimes made possible through the provision of credit facilities from banks. The availability of funds gives to the growth in other sectors of and economy. As indicated earlier, there are direct and indirect beneficiciries of a loan administered by a bank. The direct benefit is the one obtaining the loan for him even if it is for self employment. However the facilities is there for other people who will directly benefit from it in terms of employment and job creation in the same way short and long term loans do the same.
The structure of banking in Nigeria is similar to that of united kingdom. This could be attributed to the country’ colonial heritage as the first two bank to operate in Nigeria were of British origin while the new sur-country as a result of a decree copulating 40% indigenous participation in foreign banks was viewed which was put in place after the introduction of federal constitution in 1954 to indigenize the banking system. A part from the central bank, banking facilities in Nigeria were provided by two classes of banks. The foreign banks and the indigenous banks on the other hand, dissatisfactory with the facilities provided by the foreign banks and led to the establishment of indigenous banks.
As a result of the indigenization process and also the oil boon of the 1970’s more commercial, merchant and development banks sprang up in the country soas to keep up with the increase of cash flow in the economy.
Banking services in Nigeria are rendered to various sectors of the country’s economy and they include Health, industry, Agriculture, trade and Torism etc.
In order for the economy to remain buoyant, adequate funds have to be made available to these sectors to enable them function satisfactorily and also to ensure steady development. In this country, the required capital in inform of funds from banks and other financial institutions.&nbs
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