The Current Reforms In The Nigeria Banking System

CHAPTER ONE INTROUCTION 1.1Background to the Study. The current reforms in the Nigeria banking system may wash up come as a surprise to some volume who were non closely monitoring the health of the banks. The incidence of surd put and technically insolvent banking institution had been with us for sooner sometime. The unprecedented settlement of twenty six banks in 1998 in addition to the preferably closure of five banks in 1994/95 did not flummox an end to the distressed syndrome. Indeed, we admit that to reach cleansed the banking system of distressed and insolvent institutions in 1998, more institutions ought to agree been closed. However, that was not through with(p) because the Nigeria Deposit insurance Corporation (NDIC) did not have fit capital in it Deposit insurance Fund (DIF) to net income depositors. Also G overnment was un involuntary to cater the needed funds for the exercise as had been done in other countries where regime financial support amou nted to a solid proportion of the pure(a) Domestic Product (gross domestic product) for example, Argentina (early 1980 82) 55% of GDP; Indonesia (1997 to designation ) about 50%; Malaysia (1997 to date ) about 16.4% (see Hondran (klingebiel, 2001). A build of lessons had been learnt from the evacuation of the thirty one banks.

First liquidation is a costly and protracted process to be deployed as a last resort. Secondly, bank owners are too willing to defy the failure of their institutions. Consequently, they rush to court to stop the swallow over of such institutions for restructuring and sale or for l iquidation. In the end, depositors hardines! s much(prenominal) hardship and are unable to access their deposits or benefits from NDIC attributable to the protracted legal process. Thirdly, capital inadequacy played a significant role in the distressed banks, their capital plinth were so low that they could not absorb losses occasioned by nonperforming risk assets, keen competition and poor management. The 1995 cooperative study of the Central Bank of Nigeria (CBN)...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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