CHAPTER ONE
1.0 INTRODUCTION
The
history of banking can be traced to as early as 2008C in Babylon, when a
function system of banking was still in early stage. There is no universally
accepted definition of bank due to different types of banks in existence today.
As a result of different types of banks and their activities, it will be
difficult to formulate a definition which entails all the bank diverse
activities.
The
Nigerian economy comprises of different sectors among which are banking,
agricultural and mining, construction, etc. the interaction of these sectors result
in economic activities.
However,
the Nigerian banking sector comprises of central bank, commercial banks,
merchant bank and other financial institutions. This banking sector helps in
enhancing more capital formation, regulates the flow of money in the economy, gives
advice to customers; make, available foreign exchange needed for customers,
grant loan to ‘customers, and so on. It can be seen that bank has several
functions to perform and as such clarification is made base on such functions.
The
central bank of Nigeria as it is called in Nigeria is the apex bank and it is
also referred to as government bank. It helps in regulation and control Of
Nigerian financial system; it ensures the issuance of money. A country is entitled to have just one
central bank with banks across the nation. The central bank serves as bank to
the government and banks to other banks. They also issue traveler s cheque.
Commercial
banks are privately owned banks and they form the bulk of the banking sector
because they vary in number.
Though
commercial and merchant banks are at times grouped together. there is a slight
difference between them and as such accept both small and large deposits.
In
the past. Many rural dwellers did not know the use of banks, believing that it
is an institution that can only be used by the rich. But the awareness and
needs for development brought about by banks with the creation of branch offices
in such areas and also the provision of community bank and people's bank after
the introduction of Structural Adjustment Programmes {SAP} in 1986, many people
now know these banks. This is apart from keeping money with them. They also
give advice on how property can be used for funds. Banks are established for the
purpose of expansion and bringing progress to an economy which means
development.
Development
to some individual is synonymous with industrialization. Development means
sustained increase in per capital income. Every bank can be said to be
developed in the sense that all banks are needed to assist in the economic and
industrial development of the country. It was because of the overall need for
faster economic development and industrial development that Nigerians made
their first effort in 1892-1952 to start banks owned by indigenes Vis-avis the
lack of concern or interest shown in the matter by existing banks owned by expatriates.
Most of these indigenous banks collapsed but a few succeeded.
It
became clear that those early commercial banks could not provide long term finance
needed outside pure trading activities. Consequently, the regional government
of Nigeria established different regional development corporations which were
expected to play this financial role.
In
the attempt of the Nigeria economy to integrate with the global economy various
reforms programmed have been introduced in the banking system.
The
financial system of Nigeria is developing very fast and is generally looked
upon to play significant roles in Nigeria's economic transformation process. It
is aimed at addressing issues such are governance, risk management and
operational inefficiency. Specifically, financral reforms are primarily driven
by the need to achieve the objectives of competition.
The
modern connotation of development is that it is a means of achieving societal
goals such as abundant food, clothing, housing, education, etc, in pursuance of
the above ideas of modernization, economic development plans are drawn
regularly by developing countries to;
i.
Increase the availability and widen the
distribution of the basic necessities of life.
ii.
Raise the level of living through
increase in real income and provision of employment opportunity and educational
facilities to all and sundry.
iii.
Expanding the range of economic and
social amenities provided for the society.
Other
factors that help in the realization of the above goals are natural resources
endowment, labour supply and capital. In most developing countries like
Nigeria, capital is a critical factor in the process of development because
capital in the economic development of a nation makes banks important
institution and focus of government control.
In
the attempt of Nigeria economy to integrate with the global economy, various
reforms programmed have been introduced in the banking system.
Moreover,
a close looks at the lending policy at commercial banks give conclusive
evidence of creating gap in long term finance. Commercial banks are most
unwilling to finance long-term project because of lending to customers who could
use finance to increase their working capital. This gap is the essential
ingredient of development necessitated in specialized banking institution for
the basic objectives of promoting economic development.
Development
bank performs functions enunciated in the instrument establishing them. They
perform the under listed functions;
A.
Granting of medium and long term finance for;
i.
Industrial projects.
ii.
Commercial projects
iii.
Agricultural projects
iv.
Mortgage financing
In
Nigeria, different development banks perform each of the above enumerated
functions.
B.
Investigation of new investment opportunities and getting business interest.
This is done by;
i.
Generating new investment ideas.
ii.
Appraising the new project
iii.
Occasionally managing the project when
necessary
C.
where relevant development banks provide guarantees for loans made from private
investment sources especially those for building.
D.
Provision of professional assistance in engineering management and research to
industries.
The
above specialist functions are essential for survival of small businesses in
Nigeria and the economy is to grow because of financial constraint. Small scale
industry may not be able to employ the service of experts in accounting,
management, etc, and usually the development bank come in to help.
The
industrial sector is one of the major nation’s sources of income because of its
high level of contributions to the economy gross domestic product in a nation.
The criteria are;
1. At
least 25% of the GNP of a country comes from the industrial sector.
2. About
two-thirds of industrial outputs come from manufacturing subsection of the
industrial i.e. 67% of industrial output should come from such industry like
printing, peppermill textiles and rubber products.
3. At
least l0% of a country’s population is employed in the industrial sector.
These
three {3} criteria have to be jointly satisfied. None can be done in isolation.
But With the discovery of 0il, government Paid little attention to the industrial
sector and consequently decided to increase her expenditure on 0il sector with
the intention of realizing more from it.
1.2 STATEMENT
OF THE PROBLEM
A
Study of this nature ought to have compelled the researcher to visit major
commercial cities and towns in collecting data and information for the research
work. Thus, the researcher is very much aware of where he intends to do so
Constraints
ranging, from inadequate finance to time factor posses a big threat.
Even
the problem of distance and the high cost of transportation are equally
constraint facing the researcher. These problems are solved by limiting the
study to some towns. There is also the problem of reluctance due to high level
of secrecy being observed by these establishments. As a result of these
limitations, the researcher had to study different types of banks in nearby
towns and cities.
The
researcher also had a problem of free access to banking industry because of the
lots of people who queue to make one transaction or the other.
1.3 OBJECTIVES
OF THE STUDY
Since
the development of industrial sector is to be dependent on the roles played by the banking sector. This study is therefore
designed to;
i.
Critically examine the role of banking
sector on inter-tribal development.
ii.
Highlight the Ways of NBCl sources for
funds
iii.
Know if the proportion for the funds
allocated is wholly or partially utilized.
iv.
Find out the relationship between NBCI
and industrial development.
v.
The effect of the technology on
industrial sector.
vi.
Also, to determine if they monitor the
loan they gave to SMEs. The research will also suggest useful recommendation to
the bank on its areas of lapses in executing its roles.
1.4
RESEARCH QUESTIONS
In
carrying out the study, the following research questions would be considered.
i.
What is the effect of banking sector on industrial
development?
ii.
What is the effectiveness of industrial
development in the country? . .
iii.
What is the relationship between NBCI
and industrial development?
iv.
How are loans to SMEs utilized?
v.
To what extent have the banks helped in
developing the industrial sector?
vi.
What conditions do SMEs need to satisfy
before being given loans?
vii.
How soon does it take to get such loans?
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