AN EXAMINATION OF BANK INSPECTION AS AN EFFECTIVE TOOL IN BANK MANAGEMENT

CHAPTER ONE

1.1 INTRODUCTION

The role of banking sector in a develop economy such as ours can not be over emphasized. Banking sector forms the life wire of economic growth of any nation. According to recent publication by an international magazine banking sector contributed about 55% of the total economic development of Nigeria. Also the development of small and medium scale enterprise cannot be ruled out in this huge success curtained by the banking indicatory.

1.2 BACKGROUND OF THE STUDY

The banking sector in Enugu metropolis comprises the central commercial merchant and development banks etc. also inclusive are the community banks which were introduced the feel govt budget of 1990. The origin of banking sector dated back to the early 18th century even through its definition was given in the later part of the 60s and thus definition has to do with the business of receiving movies from outside sources as deposit with the agreed interstate granting of deposit with the agreed interstate granting of loans and acceptance of credits or the purchase of loans and checks or the purchase and sales of securities for accounts of others or the uncurling of the obligations to acquire claims in respect of loans prior to their maturity or the assumption of guarantor and other warrantees for others or the effecting of transfers and clearing and such other transaction as the commission may on recommendation of the central bank by order published the federal gazelle designated as banking business. The central bank of Nigeria which is government charged with the responsibility of closely monitoring and regulation of the activities of other banks to ensure that they render service to their customer in a manners that is consistent with government stipulated rules and financial policies.

The ensure that these laid down rules and standard are maintained among other bank and to guarantee that depositors monies are effectively managed there is the need for inspection and examination for effective discharge of these functions the inspectorate division of the central bank has adopted an effective internal control procedures in order to give adequate coverage thorough inspection and examination this defined objective this is enhanced by selecting adequate man-power needs for this purpose. In the recent time the comparization and digitalization of various function of banks has helped in a no small measure to curb down the excesses of bank. Also bank have established internal audit unit (inspectorate divisions ) charged with the responsibility of overacting any anomaly transaction based on through inspection and examination of its account on short term basis.

1.3 STATEMENT OF PROBLEMS

In Enugu metropolis which is my case study some problems have been identified to have invaded the banking sector and these problem have limited the out put of banks thus preventing them from reeling its desired objective..

a. The incident of fraud is prevalent in almost all the bank in Enugu metropolis as well as other state. These metpracties are now detectable through adequate supervision and examination.

b. The cases of bad and doubt full debt is now very rampant among many commercial bank. This problem is not easily nautical by bank of finical but through effective suppression and examination such evil in the banking sector can be detected easily and arrested.

c. There is very reoccurring problems of bank managers granting loans above their discretion’s and power without adequate collateral’s and this has resulted in huge losses to banks and some are the courage of liquidation. But adequate inspection and examination has provided in elating solution to this ugly trend .

d. The fear of luguidation and frequent rationalization and or retrenchment in banking sector has created fear anxiety and job insecurity workers in the banking sector tend to indulge in many despicable acts to survive these rang days. But through inspection and through examination the problem can be take of some banks within Enugu metropolis had save several embossing situation emanating from franduienl practice.

1.4 OBJECTIVE OF STUDY

The purpose and objective for which thus study was designed to achieve are here under stated as follows.

a. To identify how inspection and examination can be of assistance towards effectuation management of banking sector within Enugu metropolis.

b. To determine the magnitude of bad debts resulting from loans issued to customers which have not been recovered and also whether adequate provisions for bad debt are made for such bad debts etc.

c. To inform bank management though inspection and examination ill efficacy of their banking system and operations and recommend possible are as of change .

d. To cheek and examine how bank management grant loans over their power limit or discretion .

Limit as approved by the management .

DEFINITION OF TERMS

1. Loan: this is a sum of money tent to the government domestic and foreign lending or being lent.

2. Budget estimate of problem future income and expenditure that made by a government similar estimate made by a business company.

3. Gazette: official periodicals with legal notices news of appointment promotions of officers and officials.

4. Cheques: is an order in writings drawn on a bank and payable on demand.

5. Examination: it examining or being examined it was found that the signature was not genuine the prisoner is still under being examined.