Title page

Approval page




Table of content



1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study




3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis



4.1 Introductions

4.2 Data analysis


5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation












This study is on the role of Nigeria deposit Insurance Corporation in the banking sector. The total population for the study is 200 staff of Nigeria deposits Insurance Corporation. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made supervisors, controllers, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies











  • Background of the study

The practice of modern banking in Nigeria dates back to 1892. The pioneer banks were understandably expatriate institutions set up to facilitate the colonial administration as well as trade with Britain. The first bank was set up in 1892 and it was called the African Banking Corporation which opened the first branch in Lagos and this was championed by Elder Dempster and co; a shipping firm based in Liverpool but had it branches in Lagos in 1894 another bank called the British Bank for British West Africa. The bank acted as an agent of the bank received, stored and issued the West Africa silver coins in exchange for sterling coins or London drafts. This bank later changed its name to standard bank. In 1899, the Anglo-African bank was established in compete with the British bank of West Africa. The bank was established in old Calabar but because of the monopoly enjoyed by the British Bank of West Africa for the importation of silver from the royal mint in Britain, the Anglo African bank sold after it, changed its name to bank of Nigeria to BBWA. Another bank opened in 1917 called the Barclays bank DCO (Dominion Colonial and Overseas). Between 1894-1933, the British bank of west African and Barclays bank DCO dominated the banking scene. Another bank joined the banking scene in 1949. This bank was called the British and French bank. The bank became the third expatriate bank to dominate early Nigerian banking scene. The banks at this period were principally these expatriate banks, which were principally to render services in connection with international trade. So their relations at that time were chiefly with expatriate trading companies and with the government. These banks also controlled 90% of aggregate bank deposits. They largely ignored the development of local African entrepreneurship. It should be noted that these various expatriate banks changed their names. The British bank of West African changed its name to standard bank and its presently called 1st bank of Nigeria plc. The Barclays bank DCO changed its name to union bank plc. The British and French bank also changed its name to united bank for Africa Ltd (UBA). However, Nigerians did not take active part in banking ownership until 1930s. In an attempt to create a competitive environment with the expatriate banks, the first indigenous bank was established in 1929. The bank was the industrial and commercial bank. This bank was setup by patriotic Nigerians, but failed in 1930, in 1931, another indigenous bank was established and was called the Nigerian mercantile bank but liquidated in 1936 due to the same reasons like the industrial and commercial bank. The first indigenous bank to survive was established in 1933, called the national bank of Nigeria ltd. Other banks established include: the Agbonmagbe bank; a private indigenous bank founded by chief Okupe in 1945. However, the bank was taken over by the western government in 1969 and its name later changed to WEMA bank plc till date. Also established was the Nigerian penny bank in early 1940s but failed in 1946; the Nigerian farmers and commercial bank in 1947 but failed in 1953 and the merchants banks in 1952 but failed in  1960. Despite the fact that up to 185 banks were established between 1947 and 1952, only four(4) banks survived. These banks include: the National bank of Nigeria established in 1933; Agbonmagbe bank established in 1945 now WEMA bank; the African continental bank established in 1947; an expatriate bank. The British and French bank now united bank for Africa established in 1949 (G.O Nwankwo, 1980). However, this period of banking can be termed free for all because banking activities were unregulated. A committee called the patrons committee was constituted to look into the causes of bank failures. The report of this committee revealed the following; most banks were faced with under capitalization, poor and inexperienced management and competitive pressures from the well established foreign banks. In 1952, the 1st indigenous ordinance was made. This ushered in the era of formal banking practice in Nigeria. it established standards before license is granted to operated banks. This was applicable immediately on new banks and a period of three years was given to all existing banks survived, they include; Agbonmagbe bank, African continental banks, national bank and merchantile bank. The ordinance was later replaced with 1st indigenous banking act of 1959, and has undergone series of amendments in 1972, 1975, 1979 and was fully consolidated by 1990 company and allied matters decree and currently called banks and other financial institution decree of 1991 (BOFID). At this period, a motion was sponsored in the federal legislature for the establishment of a central bank but a complaint was made that there was no developed capital market. However, there were persistent call for the establishment of a central bank. MR. J.L fisher was appointed to examine the desirability and practicability of establishing a central bank. Although Fisher recognized the contribution of a central bank towards improvement and performance of indigenous banks he however, did not see the need for a central bank. He recommended only a more use of the financial secretary’s power (finance minister). The international bank for reconstruction and development (World bank) in 1953 also raised a motion in favour of the establishment of central bank was finally raised by MR. J.B LOYNES, the formal adviser to the bank of England. The report of Loynes committee, favoured the establishment of central bank. On March, 17th, 1958, the central bank ordinance was made. However, the central bank did not start full operation until 1st July 1959. The ordinance of 1958 has gone through series of amendments in 1962, 1967, 1968, 1969, 1970, 1972, 1976 and 1987 law later repealed and replaced with the 1991 central bank decree. Since it’s establishment, the central bank has laid the foundation for sound financial system. It also stands at the apex bank in the financial system and helps in the implementation of monetary control. It also acts as the apex regulatory authority in the banking industry, for the supervision and control of banks, sections 1 of BOFID 1991 states the function of central bank. In 1972, the establishment of the banking enterprises promotion decree affected for all sensitive sectors of the Nigerian economy was restructured to 60:40 indigenes and foreigners respectively. This is a view to taking active control of the economy from the lands of foreigners. The banking sector being one of the sensitive sector of the economy was also affected. This gave rise to the establishment of more banks by indigenes entrepreneur. Another factor that encouraged the establishment of more banks at this period was the oil boom, which sustained an increase in capital flow in the macro economy hence, enhanced the profitability of bank ownership by Nigerian entrepreneur. Therefore, at this period more banks were licensed and established. In 1986, followed the implementation of an economic structural adjustment programme. This led to the deregulation of the financial system in 1987. Entry into banking institutions increased such that the number of a total of 42 banks in 1986, the number of licensed banks increased to 120 at the end of 1992, giving an annual average growth rate of about 31 percent with the removal of control of interest rates, bank deposit jumped from about 20.5 billion in 1986 to N58 billion at the end of 1992, an annual growth rate of 55 percent. Similarly, total assets of banks increased from N68 billion in 1986 to about N232 billion at the end ofcan safe and sound banking practice be restored in the banking system. Can the competitive and creative ability of banks lead to greater efficiency instead of distress. There is no need for promote bank ethics and conduct despite various reforms and new improved banking practices. Can confidence be restored in the banking sector? Does the adoption of the deposit insurance scheme have any justification in fair compensation of depositors of banks during bank failure and liquidation? The need for this study is also borned out of the fact that there is the need to make further research on the role of Nigeria deposit insurance corporation (NDIC) to increase knowledge on previous researcher made.


Over the years the federal government was saddled with the problem of the debt owned depositors by failed banks. This government our as a big problem because more banks are licensed and this means more liability for the federal government. The government after looking critically at the problem decided to establish an organization called NDIC (Nigeria deposit Insurance Corporation) to take full charges of depositors funds in collaboration with central bank of Nigeria (CBN) the idea of a NDIC in the country was welcome to deregulate the banking sectors. The automous condition of banking sector in necessary if developments, international standardization is to be achieved and more so. It economic emancipation is to be a thing of reality. Government over influence in the running of banks is problem that has prompted the establishment of the corporation. Government can only controlled the activities of banks that are owned by over or been incorporated by law and what I mean by incorporated is by paying recapitalization requirement (#256) which introduced on 2004 by CBN governor.


The objectives of the study are;

v To evaluate the problems of mismanagement of fund

v To x-ray depositor fund insecurity in banks

v To investigate the reason for failures of banks

v To know CBN / NDIC roles in saving the depositor fund

v To find the reason for unit bank abnormal growth in the century

v To know whether banks is keeping legal reserved improved by CBN for day to day recording

v  To eliminate fraud act among banks managers

v  To wipe out distress among incorporated banks in Nigeria banking sectors.



For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0:  there are no problems of mismanagement of fund

H1: there are problems of mismanagement of fund

H02: there is no reason for failures of banks

H2: there is reason for failures of banks


In this course of study, throughout the process (information) I have acquired in my study which I have gone through I realized that the NDIC and banks and also my followed student in this field will benefit from this my study because this will make them add more seriousness on their activities and especial NDIC with put more effort in their role in banks. In academically, mostly my colleagues will benefit more from this study by knowing the input NDIC plays in our banking sectors. and also our nation will benefit from the study.




The scope of the study covers the role of Nigeria deposit Insurance Corporation in the banking sector. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


The terms in the topic of study are simply defined thus:


This is the longest country in the western region of the context of African. It has a population of well over 120million at the end of 1990 national. Census the country is enriched by God with different resources both human and natural resources. Presently, the country’s major sources of finance and global recognition are from the oil sector. The country Nigeria in muilt tribal nation and has English and French as the official languages.


this is the amount or percentage or ratio of money an individual, group of persons, company keeps with an individual, groups of persons of company that is licensed by the corporate affairs commission to operate as a bank or financial house with the purpose withdrawal at any giving time which must attract some interest.


A defined by oxford learners dictionary as “a contract made by company society, or the state to provide a guarantee to compensation for lose, damage, linens. Death etc in return the statement “beware buyers does not apply because the truth about that the intending policy holder intend to insure must be made known to the insurer to make the contract valid


This is defined by oxford learner’s dictionary as a group of people having authority to operate a single unit with a separate legal existence.


The part taken or played by an individual group of persons, companies towards achieving a goal as defines by oxford learner’s dictionary.

Banking sector

This is the sector of the country that handler the financial aspect of the economy. This sector has major players in it and they are as follows: commercial banks, merchant banks, community banks etc. this sector remain the life wire of the economy of any nation


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study







Sharing is Caring :