TABLE OF CONTENTS
CHAPTER ONE –INTRODUCTION
CHAPTER TWO-LITERATURE REVIEW
References.
CHAPTER THREE RESEARCH METHODOLOGY
CHAPTER FOUR DATA PRESENTATION ANALYSIS OF RESULT
CHAPTER FIVE –SUMMARY OF FINDING RECOMMENDATION AND CONCLUSION
Appendix a
Letter of introduction
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
The increase in the number of banks getting distressed aroused the interest in the restructuring of backs in Nigeria. THUS the Nigeria deposit Insurance corporation was instituted for such a purpose
The increase in interest is a result is as a result of three.
1. The increasing general awareness in the economic sector concerning the
role which an efficient financial system can play in economic growth and development.
2. The recent increase in the number of banks in Nigeria , which is similar to that of the early 1950,s when Nigerian experienced dismal bank failures.
3. The need for the depositor to have confidence in Nigerian banks deposit the increase in the inflationary trends. The deregulation of the Nigerian financial system led to the liberalization in the approval and issuance of banking licenses. The number of bank operating in the country grew rapidly. The N.D.K. annual report of 1996 reveled that there was 115 insure commercial l banks with 2374 branches and 54 merchant an with 145 branches in Nigeria
The increase in the number of bank consequently lead to increased competition among them, which is evident in the wide responsibilities implied use of the depositors funds in the pursuit of banks liquidity and profitability at a time bank capital deposits were falling.
In order to prevent a repeat of 1959 experience of bank failures the Federal government established a deposit Insurance Scheme by decree No 22 of 15th June 1988. However, the scheme effectively took-off in 1989 as a regulatory Institution charged with the unique responsibility of insuring bank deposits, and ensuring safe and sound banking practices through effective supervision. It was to assist the Central Bank of Nigeria (CBN) in formulating and enforcing banking policies to ensure monetary stability in the finance industry. Following these analysis, the interesting questions that arise are:-
Will the experience of 1954 dismal bank failures in Nigeria repeat?
How prepared and equipped is the N.D.I.C. in supervising banks and ensuring and promoting stability in the financial system?
Since the inception of N.D.I.C. .in 1989, has it been performing up to the expectation of Nigerians?
It is in attempt to answer these questions that the researcher will examine the role of N.D.I.C. restructuring distressed banks
STATEMENT OF PROBLEM
In an attempt to prevent a repeat of the 1954 bitter experience of banks failures, the N.D.I.C. was established by decree No. 22 of 1988 to implement the new policy of the Federal government. In the economic policy mentioned, government shifted interest from direct cash support for banks to prevent failure, to protecting the deposits of customers, especially the small customers by ensuring their deposits.
Consequently, the compulsory nature of the N.D.I.C. did not appeal to some banks. The Insurance Companies became afraid that the N.D.I.C. will take over their routine jobs, but the N.D.I.C./ CBN accommodation facilities is aimed at curbing liquidity crisis in banks. Finance analysts wanted to see the effectiveness of the accommodation facilities while other interest groups argued that the flat premium rate charged on the deposit liabilities of insured banks will place weak banks on a competitive disadvantage. Hence the main task before this research work is to critically analyze the role of N.D.I.C. in restructuring distressed banks, protecting depositors funds and limiting the problem of bank failure in Nigeria
1.3 OBJECTIVE OF THE STUDY The objective of this research work is to critically examine the role of
N.D.I.C. in restructuring distressed banks in Nigeria. It will take into consideration the achievements made so far by N.D.I.C. by verifying if the flat premium rate enhanced effective competition between banks. It will also ascertain if the N.D.I.C./CBN accommodation facility helped banks in liquidity crisis and if the role of N.D.I.C in distressed banks will stop future bank failure. It will also suggest how the activities of N.D.I.C. can be improved for better performance.
To effectively examine the topic under study the following research
questions are relevant and will be given adequate attention.
To what extent has the flat premium rate charged on the deposit liabilities of Insured banks, enhanced effective competition between banks? In other words does the uniform premium rate, place weak banks on a competitive disadvantage?
Citizens and monetary authorities in Nigeria desire safe and sound banking system, to what extent has the compulsory nature of N.D.I.C. can be improved for better performance.
How effective is the N.D.I.C./C.B.N. accommodation facility created to rescue banks on serious liquidity crisis?
Will the role of N.D.I.C. effectively guard against a repeat of bank failure?
The research work will be guided by the following hypothesis:
HO There is no positive and significant relationship between N.D.I.C. flat
Premium rate and competitive efficiency in the banking industry.
HA There is a positive and significant relationship between N.D.I.C flat
Premium rate and competitive efficiency in the banking industry
HO The introduction of N.D.I.C./C.B.N. accommodation facility has not
Enhanced banks profitability.
HA The introduction of N.D.I.C./C.B.N. has enhanced banks profitability.
1.6 THE SIGNIFICANCE OF THE STUDY:
The study aims at tackling a problem that is currently plaguing the Nigerian financial system. It is the opinion of the researchers that the study will be of immense help to bankers who are afraid of N.D.I.C. policies. Insurance companies will nee this work to understand the operational limits of the N.D.I.C. The study will help to enlighten the banking public on N.D.I.C. operations and the importance of that vital corporation in insuring depositors funds.
Finally the study will be helpful to N.D.I.C. officials whose official duty may not have allowed to carryout research on its activities. This may serve as a basis for further research.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The scope of this research is restricted to banks in Enugu state. The research will look into the operations of the N.D.I.C. from inception to date. The research work is limited by shortness of time at the disposal of the researchers, non-cooperation by banks management personnel who are the targets of the questionnaire, and non-availability of appropriate texts. Finally, the cost of financing a project is so high that it become a limiting factor, that is why the scope of the research work is limited to what you see here.
1.8 DEFINITION OF TERMS
Flat Premium Rate: This is the uniform Insurance premium charged by
N.D.I.C. on the deposit liabilities of Insured bank. It is 15/16 of one percent of total deposit in the Vault of the bank as at 31st December of the Previous year.
Accommodation Facility: It is an arrangement whereby Accommodation bills in the form of Overdrafts are drawn on N.D.I.C. as the Acceptor and subsequently discounted at the C.B.N. to clear the overdrawn position of the Insured bank.
DISTRESSED BANK: Banks that are not able to pay depts. And Meeting up with its financial commitment Due to inefficiency in management, Misappropriation and fraud.
Nigerian Banking System: It is made up of The Central Bank Of Nigeria, the Commercial banks, merchant Banks and the Development Banks.
NIGERIA DEPOSIT INSURANCE CORPORATION (NDIC )
It is a family rules and regulations within different categories of financial arrangements, Institutions agents, and the mechanism whereby they relate to each other within the financial sector.
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