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Banking Inspection And Examination As An Aid To Effective Banking Management

(A Case Study Of Uba Agbani Road Enugu)

5 Chapters
|
47 Pages
|
5,672 Words

Banking inspection and examination serve as indispensable tools in ensuring effective banking management by providing critical insights into the financial health, risk management practices, and compliance standards of financial institutions. Through thorough assessments conducted by regulatory bodies or internal audit teams, banks can identify potential vulnerabilities, assess the adequacy of internal controls, and address any deficiencies promptly. These examinations also help in maintaining the stability of the banking system by mitigating systemic risks and ensuring adherence to regulatory requirements, thereby fostering trust among depositors and investors. Moreover, by offering recommendations for improvement based on their findings, banking inspections and examinations contribute to enhancing the overall operational efficiency and resilience of banks, ultimately supporting sustainable growth and profitability in the financial sector.

ABSTRACT

The objective of this study was to explore the possible banking inspection as an aid to effective bank management with particular reference to UBA Plc Enugu.
To guide this research, the following eight research questions were formulated as thus
What are the control measures against the bad debt in the bank being achieved?
To what extent are the workers being assured of jobs?
What are the control measures against the bad debt in the bank being achieved?
To what extent are human and non-human resources adequate for efficient inspection in the bank?
To what extent has the bank provision against computer found being checked?
A structured questionnaire developed by the researcher was administered to a total of 102 male and female staff of UBA Plc, Enugu.
They were selected using the sample of 50 population. Hence the data collected and analyses using percentages.
The major findings among other are:
1. Those males are majority in UBA Plc, Enugu.
2. Greater majority of the staff have served for 6 to 10 years and more.
3. Majority are WASC/GCE holders.
4. Greater majority of the staff are married.
5. Resources are not adequate except few resources items.
6. Computer fraud has not been experienced in UBA Plc, Enugu.
7. Interference and job/position insecurity of inspector’s effects objectivity report and recommendation.
8. Also non-implementation of provisions reports effect inspector’s functions.
9. Bad debt occurred in UBA always based on the findings. The major recommendations were as follows:
In service training should be given to staff an regular basis to get abreast with demands of the time.
Use delegation as a supervisory strategy to be in professional touch despite physical remoteness in all sectors of the banks.
Seminars, staff meeting, individual conference, demonstration service, provision of office bulletin and make people closer.
Promotion of good working relationship by cultivating desirable temperament.
Leadership functions such as coordinating, researching and servicing should be taken serious as a lore development in the bank.
Staff safety and welfare must be assured for continuity.

TABLE OF CONTENT

TITLE PAGE
APPROVAL PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
LIST OF TABLE
TABLE OF CONTENTS

CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 The objectives or purpose of the study
1.4 Scope or delimitation of the study
1.5 Research questions
1.6 Significance / rationale of the study

CHAPTER TWO
2.0 Review of literature
Summary of related reviewed literature

CHAPTER THREE
3.0 Methodology
3.1 Research design
3.2 Area of study
3.3 Population of the study
3.4 Sample and sampling procedure
3.5 Instrument for data collection
3.6 Validation of the research instrument
3.7 Reliability of the research instrument
3.8 Method of administration of the research instrument
3.9 Method of data analysis

CHAPTER FOUR
4.0 Data presentation and results
Summary of results/findings

CHAPTER FIVE
5.0 Discussion, implication, recommendations
5.1 Discussion of results
5.2 Conclusion
5.3 Implication of the result
5.4 Recommendations
5.5 Suggestions for further research
5.6 Limitation of the study
REFERENCE
APPENDIX

CHAPTER ONE

INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The banking act of 1969 defined banking business as the business of receiving monies from outside resources as deposits, irrespective of the payment of interest and the granting of money loans and cheques, or the purchase and sales of securities for accounts of others or the incurring of the obligation to acquire claims in respect of loans prior to their maturity or the assumption of guarantees and other warranties for others.
In Nigeria, the banking business is being operated by the central bank of Nigeria CBN which acts as the apex bank commercial banks, merchant banks and of course the people’s and community bank established by various decrees promulgated by the federal military government.
Commercial banking actuates started in Nigeria in 1892 when the African Banking Corporation commenced its bank work in Lagos.
One of the basic roles of the central bank of Nigeria is the supervision and control of other banks.
The CBN’s objective and goals of banking inspection and examination are:
1. To develop a sound banking system
2. To protect depositors and creditors of the bank.
3. To provide adequate banking services in all part of the country.
4. To promote rapid economic development throughout the country.
The bank examination department of CBN was created by Sec. 20 of the banking act of (1969).
The powers of the banking act include:
1. The appraisal of the management with special attention to competence and general effectiveness
2. Appraisal of the system of operation procedure and control.
3. Assessment of the adequate of capital structure in relation to the size of business.
At the management level of each bank (Commercial, Merchant etc) a system of inspection and control exists to ensure that these guideline are followed and also ensure that loans are not indiscriminating issues by manager. The interest of the owners as well as the staff of such banks are also protected by this.

1.2 STATEMENT OF PROBLEM
The problems are:
(a) Lack of fraud prevention and determination in banking institution as a result of poor inspection and examination.
(b) Ineffective banking management caused by essence of bank inspection and examination.
(c) Non compliance by bank manager with CBN and other government regulations on granting loans.
(d) Non protection of the bank depositors and creditors interest.

1.3 THE PURPOSE OF THIS STUDY ARE
(a) To determine whether bank inspection and examination has helped in the prevent and detection of fraud.
(b) To determine how bank inspection and examination can be of assistance to effective bank management.
(c) To find out whether bank managers comply with CBN and other government regulations on granting of loans.
(d) To know how bank inspection and examination has helped in protecting the interest of depositors and creditors of the bank.

1.4 SCOPE OF THE STUDY
The scope of this work is limited to United Bank for African Plc, Agbai Road, Enugu that is second to the larges within the metropoly.

1.5 RESEARCH QUESTIONS
(a) Does the bank inspection a well as its examination helps in the prevention and detection of fraud.
(b) Do bank inspection and examination assist in ensuring effectiveness in bank management.
(c) Do the bank manager comply with CBN and government regulations in granting of loans.
(d) To what extent have bank inspection and examination helped in protecting the interest of depositors and creditors of the bank.

1.6 SIGNIFICANCE OF THE STUDY
The researcher wished that through this study the doubts and fears instigated in the minds of the general public as a result of the (insecurity of their money) distresses in banking would be cleared.
This study also will be of benefit to bank inspectors, external auditors, accountants, bank management, bank depositors and creditors and the general public who rely much on inspection reports.
The researcher also helps that the result of this study will restore trust and dignity of the banking system in Nigeria.

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Banking Inspection And Examination As An Aid To Effective Banking Management;

Banking inspection and examination play a critical role in ensuring the effective management of banks and financial institutions. These processes are essential for maintaining the stability and integrity of the banking industry. Here’s how banking inspection and examination aid in effective banking management:

  1. Risk Management: Banking inspection and examination help identify and assess various risks that banks face, such as credit risk, operational risk, liquidity risk, and compliance risk. By identifying these risks, banks can develop strategies to mitigate them effectively, ensuring the safety and soundness of the institution.
  2. Compliance: Regulators and examiners ensure that banks adhere to all relevant laws and regulations. This helps banks avoid legal issues, penalties, and reputational damage, which can undermine effective management.
  3. Asset Quality Assessment: Inspection and examination assess the quality of a bank’s assets, including loans and investments. This is crucial for identifying potential problem loans and taking corrective actions to prevent losses.
  4. Capital Adequacy: Regulatory bodies use examinations to ensure that banks maintain adequate capital levels to absorb potential losses. This safeguards the bank against financial instability and failure.
  5. Corporate Governance: Examination processes often review a bank’s corporate governance structure. Effective governance is essential for making strategic decisions, risk management, and maintaining accountability within the organization.
  6. Fraud Detection: Banking inspections can uncover fraudulent activities within a bank, such as embezzlement or money laundering. Detecting and addressing these issues promptly is vital for effective management.
  7. Operational Efficiency: Examinations also evaluate the efficiency of a bank’s operations. This includes assessing processes, technology, and organizational structure. Improving operational efficiency can lead to cost savings and better management.
  8. Customer Protection: Inspection and examination ensure that banks are treating their customers fairly and transparently. This is critical for maintaining trust and customer satisfaction, which are essential for effective banking management.
  9. Stress Testing: Regulators often require banks to undergo stress tests to assess their resilience under adverse economic conditions. This helps banks prepare for and manage potential crises effectively.
  10. Market Confidence: A well-regulated and examined banking system enhances market confidence. When investors and depositors have trust in the stability and integrity of banks, it leads to better access to capital and lower borrowing costs, benefiting the bank’s management.
  11. Early Warning System: Banking inspections can act as an early warning system, alerting both the bank’s management and regulatory authorities to potential problems. Addressing issues in their early stages is typically less costly and disruptive.
  12. Continuous Improvement: Examination findings provide valuable feedback that banks can use for continuous improvement. This includes enhancing risk management practices, refining strategies, and strengthening internal controls.

In summary, banking inspection and examination are essential tools for maintaining the stability and effectiveness of the banking industry. They help banks identify and address risks, ensure compliance with regulations, and promote good governance practices. Effective banking management relies on these processes to operate efficiently and sustainably while protecting the interests of depositors and the broader financial system.