ABSTRACT

Bank distress has been a predominant factor in the banking system of Nigeria since the early years of banking.  This trend became noticeable in the industry with the failure of many banks in the early 90’s and late 90’s distress saga brought about the research work the evaluation of the impact of the Nigerian deposit insurance corporation  (NDIC) the work is structured into a five chapter book for easy and comprehensive reading.

The frist chapter deals with the background of the prevailing circumstance in the industry that necessitated the establishment of the deposit insurance scheme it further work on the reveal the various loopholes and bottlenecks of the supervisory authorities and also examine the impact of the regulatory and supervisory bodies (NDIC & CBN) at resolving the prevalent bank distress and failure.  It also shows the extent and depth of distress the measurability of distress and also states the various distress resolute on option such as revocation of licenses increase and acquisition and  financial assistance given to affected banks by the regulatory authorities.

The materials and techniques used in acquiring the information needed  for the research work were purely secondary data obtained through the reviews of journals newspaper past work by other students and seminars by well known academicians.  Based on analysis of the data collected information leading to distress of banks were certified and most of the causes were also certified they were traced to be caused by institutional factors, political and economic factor similarly and were drawn from the major finding of the research work and adequate recommendation were made in line with the finding to enable readers who will find the work germane to the field and subsequently bring about animal or nonexistent  of distress in the Nigeria financial system

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The federal government of Nigeria ride decree No 22 established the Nigeria deposit insurance corporation in July 1988, This regulatory institution is set up to insure  all deposit liabilities of licensed banks and other financial institutions the NDIC act Capt 301 L.F.N 1998 further stress on the establishment of the NDIC by the federal government to incuse bank deposit protect depositors interest and also help in promoting page and sound banking system and further inculcating banking habit among our people.

The Nigeria deposit insurance corporation is an antonymous regulatory body and has the authority to examine the books and affairs of insured banks and other deposit taking financial institution every licensed bank and other deposit taking financial institution operating in Nigeria are man dated to insure its total deposits.

A depositor in a Nigerian deposit insurance corporation insured bank will not pay for the cost of this deposit insurance. It is the insured bank that pays through annual assessment on its volume of such deposits.

The authorized capital of the corporation is N100 million out of which N50million had already been called and paid up by the federal government and central bank of Nigeria banks of Nigeria (CBN) in the ratio of 2.3 the decision by the federal government of Nigeria to establish the NDIC are.

1.                 To encourage  saving by increasing the safely of deposit and ensuring development of banking practice.

2.                 To refund every insured bank depositor to the maximum tune of N50,000 if this bank is liquidated.

3.                 To protect the deposit of customers.

In Nigeria today hardly can any year pass by without one hearing of one kind of distress or the other in the banking sector. The problem of distress in the financial sector including outright bank failure was observed in Nigeria as far back as 1930, when the first bank failure was reported.  Between 1930 and 1958 when the CBN was established over 21-bank failure was reported the number of banks today classified as problem banks as on the increase and have continued to be of serious concern to depositor government and regulatory authorities.

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