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THE EFFECTS OF BANK INSPECTION IN ENFORCING BANKING REGULATION

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CHAPTER ONE

1.0    INTRODUCTION

In an increasingly competitive banking environment which is characterized by frequent changes in the regulatory environment, high cost of operations, dim misting spreads on profit from business as a result of sharp practices and the restriction imposed by unstable political and economic climates. It is imperative that who are able to detect irregularities and monitor discrepancies before impose a cost burden on the bank.

The relevant of the forgoing emphasis is underlined by the fact that in the banking sector, the most essential differences between one bank and another is the quality of staff. The degree of efficient operations and effective internal control system. The system in attaining these overriding objectives is the effectiveness and efficiency of the banks inspector policy system and procedure.

It is common realization than on effective inspection system services as a foundation for ensuring that the assets of the bank are adequately protected in order to support the banks aggressor business plans therefore, it is essential that banks as a matter of deliberation policy should continually obtain information about the inspection policy, system and pattern in the industry so as to ensure that availability of a verifiable and consistent basis if assessing the maximum utilization of shareholders finds and of its internal control and monitoring mechanism.

1.1   STATEMENT OF THE PROBLEM

It has been observed that some banks are by for performing better than others and these performing banks are mostly those with a sound inspection division. Bank inspection as a banking career has over the years been regarded as the most volatile aspect of responsibilities despite certain contradictory view of inspections, staffs who are other been looked upon as the police of the bank as well as those that flock into the abyss of a death and isolated from the existing bank customers international relationship. On the other, the dilemma on the part of the branch staff being inspected. They see inspection staff as enemies of progress whose objectives are to checkmate their career growth and also sees work by magic work and unwritten rules rented in enclosure knowledge. This research is carried out to debone those fears assumption and wrongly held views and in particular to real the truth of the subject to other researchers, scholar bankers and banks as a whole. Though recently introduced reforms imposed by the immediate past CBN Governor – Charles Soludo and the present CBN Governors Sanusi Lamido Sanusi.

1.2    OBJECTIVE OF THE STUDY

–  To find out the need for fostering and maintain a sound inspection system in the banking industry.

– To determine whether banks comply with the condition of the regulatory authority and to establish that the component structures of the bank are guided on the right part in implementing the management policies at all levels.

– To identify areas of bank weakness in order to prevent or minimize loses and to ensure that proper control mechanism regarding operational procedures are put in place as well as strict adherence to every transaction in the bank.

– To proper solution which will prevent the reoccurrence of frauds irregularities, policy violations and exploitation as a result of internal control weaknesses in the existing inspection division of the various banks.

1.3    RESEARCH QUESTIONS

1. Why should sound inspection be carried out on banks?

2. Do banks comply with the conditions of the regulatory authorities?

3. What are the weakness areas of banks’ Operations?

4. How can reoccurrence of frauds and other irregularities be prevented in banks?

1.4    SIGNIFICANCE OF THE STUDY

As much as it will be a great importance and necessity in ensuring continuous research in undertaken to provide new and unique concept of bank inspection that would make certain banks gain access to such information in achieving a significant leverage over its pears in the industry this study is expected to serve as a secondary data for future researchers, scholars, students as well as the management of first bank of Nigeria Plc (FBN) and other banks in the industry. Past studies and experiences have showed that no bank or any financial organization has maintained a steady trend of its business plans without an effective and efficient inspection or internal control system mechanism hence the need for a bank or any financial institution with a weak.

On 31st March 1894 the head office was located in Liverpool in London, under the cooperative company in Lagos and was incorporated as a limited liability company in London 31st March 1984 with name of the bank of British west Africa with a paid up capital of 12,00 pounds sterling, it had absorbed its predecessor, African banking started business in 1892 and in 1896 a branch in Nigeria was opened in Africa gold coast (Ghana) whole another branch was established in serial eon in 1898. The second branch in Nigeria was open in the old caliber in 1900 and two years later, its northern regional branch at Kaduna was also opened. Which is the main concern as far as this research work is concern.

The branch has experienced phenomenal growth over the years with a share capital of 55.6 million naira (including a bonus reserve of (55.8 million naira) in 1995 at N500 million in 1998. The bank total assets current stand at 60 billion naira. At the commencement of operational in 1894 it has a staff of six(6) comprising of three (3) European and (3) three African. But in 2006, the bank virtually materialized. In its march toward national development, the bank has led to continually adjust its organization structure and corporate entity started with west African countries the bank was incorporated locally in 1969 to become standard bank of Nigeria limited (SBN). This was in response to the dictate of company decrees of 1986 and thereafter the bank became a cooperate entity. Further changes in the name of the bank were made in 1979 and 1992 to first bank of Nigeria limited also to first bank of Nigeria Plc respectively.  First bank of Nigeria Plc (FBN) has diversified into a wide range of banking activities and subsidiaries including merchant and inter-na-tional banking. Inspection policies, system and pattern to put in place a dynamic inspection division in place.

1.5    Scope of the Study

In the study, the effect of banking inspection and regulatory body (CBN) in enhancing quality and effective services delivering to the entire financial institutions and that nation at large. It therefore, call for an intensive research work into the inspection division with a view of know more about how it enfore, due to some constraining authorities. However, due to some constraining factor such as time, lack of accessibility to confidential records financial unco-operative staffs reluctant to answer questions and problem, mobility are regarded as some of the limiting factors of this research work.

Time factor as stated above his great relevance to any research work but due to research normal academic program, little time is devoted to this research work. Time factor as satted above great relevance to any research work but due to research normal academic program, little time is devoted to this research work. “confidentiality of records is the order of the days. Banking business. People are usually afraid of being devoted for fear of victimization by their employer. While finance as the name implies constitute a major setback in any human endevours especially when it involves research work.

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