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TABLE OF CONTENT

CHAPTER ONE

1. INTRODUCTION

1.1       STATEMENT OF PROBLEM

1. PURPOSE OF THE STUDY
2. SIGNIFICANCE OF THE STUDY
3. STATEMENT OF HYPOTHESIS
4. SCOPE OF THE STUDY
5. LIMITATIONS OF THE STUDY
6. DEFINITION OF TERMS

REFERENCE

 

       CHAPTER TWO

1. LITERATURE REVIEW

2.1       THE ROLE OF BANS IN AN ECONOMIC SYSTEM

1. CAUSES OF DISTRESS BANKS
2. TECHNIQUES FOR IDENTIFYING DISTRESSED BANKS
3. BRIEF HISTORY AND BUSINESS OF SAVANNAH BANK OF NIG. PLC.
4. RATIONALE FOR THE ESTABLISHMENT OF NDIC
5. ROLE AND BENEFITS OF NDIC TO  NIGERIA
6. EXPECTED ROLE OF NDIC TOT HE BANKING SYSTEM
7. OPERATIONAL ISSUES
8. MERCHANT BANKS’ CONCERN
9. INTERNATIONAL DEVELOPMENT ON CONVERGE
10. EXCLUSION OF GOVERNMENT STOCK TREASURY BILLS AND CERTIFICATES
11. NDIC AND BANK DIRECTORS
12. THE ROLE OF FAILED BANK TRIBUNAL AND DISTRESSED BANKS

REFERENCE

 

CHAPTER THREE

3.0       RESEARCH DESIGN AND METHODOLOGY

3.1       SOURCES OF DATA

            PRIMARY DATA

            SECONDARY DATA

3.2       SAMPLE USED

3.3       METHOD OF INVESTIGATION

            REFERENCE

 

           

 

CHAPTER FOUR

1. DATA PRESENTATION AND ANALYSIS

4.1       DATA ANALYSIS AND INTERPRETATION

4.2       TEST OF HYPOTHESIS

            REFERENCE

 

            CHAPTER FIVE

5.0       SUMMARY OF FINDINGS

5.1       CONCLUSION

5.2       RECOMMENDATIONS

5.3       BIBLIOGRAPHY

            APPENDIX

 

 

 CHAPTER ONE

 

1.0                   INTRODUCTION

            BACKGROUND OF STUDY

A bank deposit insurance scheme is widely seen as a financial guarantee to depositors, particularly the small ones, in the event of bank failure. Bank deposit insurance scheme developed out of the need to protect depositors, especially the uniformed, from the risk of loss and to protect the banking system from instability occasioned by falls and loss of confidence.  The banking system has been singled out for this special protection because of the vital roles banks play in an economy especially in the process of economic development.

The Nigeria Deposit Insurance corporation is an agent of financial government of Nigeria established by decree No. 22 of 15th June, 1988 to insure the deposit liabilities of licensed banks and other deposit – taking financial institutions operating in Nigeria.  The authorized capital of the corporation is N100million  out of which N50million has been already called and paid up.  The scheme protect depositors of failed banks either by paying off depositor or arranging for their deposit to be assumed by another bank which is viable.  In a deposit pay-off, the decree specifies that NDIC shall make direct payment to a depositor up to a maximum amount of N50,000,000.

Deposit in excess of the amount may be met in part if these are sufficient funds after the bank is liquidated.

Nigeria Deposit Insurance Scheme maintain the fund system to which every licensed banks are required to pay 15/16 of one percent of the total accessible deposit liabilities standing in its books as at 31st December of the preceding year.  The rate is designed to provide premium reserve fund to offset claims in the event of pay off or to support a failing bank.  For instance, any financial and technical support that may be required to safeguard the banking system are to be met out of the premium reserve fund.  A systematic failure of deposit taking institutions increases the level of distress in the financial system, results on disintermidiation, low saving and investments, poor execution of monetary policies and the disruption of the payment system.

Among the action usually taken by government to restore stability are the restructuring of the distressed institution, the improvement of the existing bank supervision and examination systems and the establishment of deposit insurance schemes.  In particular, the creation of explicit deposit insurance schemes are intended to help restore public confidence in the banking system, provide the government with a formal mechanism for dealing with failing institutions and assure that small depositors would be protected in the event of failure.

Generally, more explicit insurance schemes supervise the institutions they insured.  The off-sight surveillance of the scheme to develop early roaming signal against potential problems on insured institutions.  Also, through on-sight examination, the deposit insurer is able to monitor the soundness of insured institutions.  These supervisory activities in addition to various forms of assistance to  insured institutions, including deposit guarantee’s to depositors, engender depositor’s confidence in the financial system.  A high level of depositors is a necessary condition for bank stability, for without such confidence even unfounded rumours of an institution’s unsoundness would trigger deposit runs and precipitate instability in the financial system.

 

1. STATEMENT OF PROBLEMS

The nation is today once again witnessing a proliferation of new banks in our system.  This together with the on-going deregulation of the banking system justifies the government decision to find alternative means of protecting the interest of depositors.  Thus, the introduction of Deposit Insurance Scheme was considered to provide a watershed between the old and the new stance of government as a veritable scheme that would serve as a vehicle to allow a change in policy.

 

By the end of 1991, for example, eight (8) banks in

Nigeria was officially classified as distressed.  By December, 1992 the number rose to fifteen (15) it was up to twenty-seven (27) as at December, 193, forty-seven (47) as at December, 1994.  “it” rose to fifty-seven (57) as at July, 1995. The was the more reason urgent attention, should be given to this canker-worn that has eaten deeply into the economic fabric of this great nation – Nigeria.

 

In the year 1988, Deposit insurance Scheme was

established banks.  The problems encountered by the scheme are:

1. Failure to understand the regulation and purpose of the scheme
2. Inadequacy of offices to handle and monitor banks within their zone.
3. Most bank directors regard certain information confidential

which is needed by the scheme to execute their supervisory function.

 

1. Merchant banks opted for exemption because  the amount of coverage of N50,000.00 is exactly equal to their minimum deposit.

 

1. Some banks refused to channel their full participation with the argument that the scheme ought to have been voluntary since some banks especially the large ones are not likely to fail.
2. Some banks have argued that all deposits with licensed banks need not be insured, since a good proportion of the deposits in licensed bank is not exposed to risk.

 

However, among the questions to be answered in the research work, include:

 

1. What are the rational for establishing Bank Deposit Insurance Scheme in Nigeria?
2. What is the functional relevance of the Deposit Insurance Scheme to the banking system since its’ inception in Nigeria
3. Is there any relationship between NDIC and Commercial/Merchant Bank in crisis?
4. Is there any relationship between NDIC and the Central Bank of Nigeria?
5. Is the present ‘Dis’ adequate for the Nigeria financial system?
6. What are the achievements of NDIC since it’s inception?
7. What role did NDIC play in the operation of Savannah Bank of Nigeria?
8. What is the role of the government, the CBN and Ministry of finance in the operation of NDIC?
9. What is the role of the failed bank tribunal in distressed

 

1. PURPOSE OF STUDY

The purpose of this research work is among other things to:

1. Examine the rational for establishing Bank Deposit Insurance Scheme in Nigeria.
2. To determine the functional relevance of Nigeria Deposit Insurance Scheme to the Banking system up to date
3. To ascertain the relationship between NDIC and Commercial Merchant Bank in crisis.
4. To critically examine the differences and similarities of NDIC and Insurance Company
5. To unveil relationship between NDIC and the Central ank of Nigeria.
6. To ascertain the role of NDIC in the operation of Savannah Bank of Nigeria.
7. To critically examine the role of Government, the Central bank of Nigeria and the Ministry of Finance in the operation of NDIC.
8. To compare NDIC with U.S.A, FDIC
9. To critically examine the role of the failed bank tribunal in distress banks
10. To critically examine the adequacy of the present “Dis” for the financial system
11. To proffer suggestions to make the scheme more functional where necessary, in order to attain it’s stated objectives.

 

1. STATEMENT OF HYPOTHESIS

(a).       Ho – There is no rational for establishing Bank Deposit Insurance Scheme in Nigeria.

Hi – There is rational for establishing Bank Deposit Insurance Scheme in Nigeria.

 

(b).       Ho – There is no functional relevance of the Deposit Insurance Scheme to the Bank system since it inception in Nigeria

Hi – There is functional relevance of the Deposit Insurance Scheme to the Banking system since its inception in Nigeria.

 

(c).       Ho – There is no relationship between NDIC and Commercial/Merchant Bank in crisis.

Hi – There is positive relationship between NDIC and Commercial/Merchant Banks in crisis.

(d).      Ho – There is no relationship between NDIC and the Central Bank of Nigeria.

Hi – There is positive relationship between NDIC and the Central Bank of Nigeria.

 

(e).       Ho – There is no positive relationship between NDIC and old Savannah Bank of Nigeria.

Hi – There is positive relationship between NDIC and old Savannah Bank of Nigeria.

 

(f).       Ho – The present “Dis” is not adequate for the financial system.

Hi – The present “Dis” is adequate for the financial system.

 

1. SIGNIFICANCE OF STUDY

The study will attempt to identify the causes of distress

bank especially in old Savannah Bank of Nigeria as a selected case study.  The significance of the study as at this point in time cannot be over – emphasized.  The following will benefit immensely from the work.

1. Researchers
2. the bankers, financiers and the insurers
3. the government and regulatory authorities
4. students
5. the general public

1. RESEARCHERS

Other researchers in the field can make use of this work,

they can continue from where the work stopped bearing in mind that this is not a comprehensive research work.

 

 

1. BANKERS, FINANCERS AND THE INSURERS:

If the aforementioned go through this piece of work

thoroughly, they would be able to assess fully if NDIC is living up to expectation, they would be able to make useful suggestion towards correcting the issue.

 

1. GOVERNMENT AND REGULATORY AUTHORITIES:

The government of the Federal Republic of Nigeria

established NDIC in the year 1988. From this piece of research work, the government and her regulatory bodies would be able to ascertain the performance of NDIC since its inception.  In the course of doing this, they would be able to identify the area NDIC has covered fully and to reconcile the two by mapping out strategies to arrest the loopholes.

 

1. STUDENTS:

Students in higher institution

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