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Banking business started as far back as the seventeenth century. When the receipts issued by Goldsmiths to depositors were used as a means of exchange in commercial transaction. Because these receipts were accepted generally, they became transferable too. A bank is an institution where money and valuables are kept for safety purposes. Bank also lend money known as loan, pay out money on the customers order by means of a change and bank draft and also give over draft to customers.

The structure of banks can be grouped into the following namely.

CENTRAL BANK This is the apex financial institution which is charged with the responsibility of managing the cost, volume availability and direction of money and credit in an economy with a view to achieving some desired economic objectives. This was established in March 1958 and started full operation by 1st July, 1959 which was after many banks like West African Currency Board (WACB) in 1912, and the international bank for Reconstruction and Development (IBRD) in 9155 failed to perform their objectives, and they later folded up.

COMMERCIAL BANK: They are financial which carry out the ordinary banking business of receiving deposits, advancing loan, discounting bill and offering related services to the general public. This started in Nigeria in 1892 with the establishment of African Banking Corporation and folded up in 1893. Then British Bank of West Africa (BBWA) was established in 1893, started operation in 1894 and later fold up too. Many other banks came into existence, which equally folded up. This is classified into main group, which are as follows.

INDIGENOUS BANK: These are banks fully owned and controlled by Nigerian citizen including government. The first Indigenous bank in Nigeria was the National Bank of Nigeria (NBN). Which started operation in 1933 followed by African Continental Bank LTD (ACB in 1947.

MIXED BANK: These are bank jointing owned and controlled by foreigners and Nigerian Citizens including government.

FOREIGN BANKS (EXPATRIATE BANK): These are bank fully owned and controlled by the foreigners. The Nigerian indiginization Act of 1972 converted most of these foreign banks, which was later phased out long time. However, the 1995 budget has reintroduced the foreign (expatriate) trade in which banking system is an integral part of it.

MERCHANT BANK: This is a bank that specialize in providing who engaged in whole sale banking, medium and long term financing, equipment leasing debt factoring, investment management, acceptance bills and management of unit trust. This was established in 1964.

DEVELOPMENT BANK: This is bank which specialize in providing long term fund for industrial, agricultural, commercial and mortgage development. Also, it helps entrepreneurs by providing loans and consulting services to them. This is classified in the following groups namely.

NIGERIAN INDUSTRIAL DEVELOPMENT BANK (NIDB): This was established in 1964 to replace the investment corporation of Nigeria. This assists the public and private sector companies.

NIGERIAN BANK FOR COMMERCE AND INDUSTRY (NBCI) This was established I 1973 to see to the financial implementation of the enterprises promotion decree of 1973. This assists the indigenous businessmen.

NIGERIAN AGRICULTURAL AND CO-OPERATIVE BANK (NACB) This assists the agricultural sectors individual farmer and co-operative bodies and is fully owned by the federal government.

This was established in 1973 with a capital of twelve million naira (N12 million).

FEDERAL MORTGAGE BANK (FMB) this is a bank established by the government to help people build house by giving them long-term loans. The customers pay back what they own the bank by mortgaging the land and house till they finish what they are owing.

SPECIALIZED BANK: This is another types of bank which was established by the government and it includes the following namely.

PEOPLES BANK OF NIGERIA: This is set up by the Nigerian government in 1989 to help petty traders. They also provide loans in-group at no interest rate but an administrative cost of fifteen percent (15%) of the loan.

COMMUNITY BANK: This is self-sustaining bank owned and managed by a community or a group of communities to provide financial services to that community. This was established in1990.

Banking system is the system at which banks operate. This is divided into four groups namely.

UNTIL BANKING: This is a types of banking system where the bank involved operate without branches. This is commonly found where commercial bank exists.

BRANCH BANKING: This system relate to a situation where there are few bank with a large number of branches. This then falling the readers that the bank seen here operate with branches.

GROUP BANKING: This system is a situation where three more independent banks are brought together under one control through the exercise of majority share stock ownership. Despite the creation of all these banks by the government to and entrepreneurship development. The Nigeria banking system still encounters a lot of problem, which has disrupted its operation in the country.


The problem in a nutshell includes such practices as fraudulent activities and mismanagement by bank officials poor, liquidity and unavailability of adequate credits to deserving customers. The phenomenon technically referred to as “Bank distress” has become a regular feature in the Nigeria banking industry. It connotes the erosion in the capital base of the enterprises, which is commonly traceable to indigenous banks. Nigerians set up these banks as earlier mentioned with sole objective of meeting the business needs of follow Nigeria. For insurance the National bank, when established in1933, work towards catering for the interest of Nigerian. Which aimed at assisting indigenous companies and individual who were victims of the discriminating practices of foreign banks. These banks have achieved a lot in the country since their inception irrespective a very serious set backs caused by unco-operative attitudes of bank delfors and hard regulatory polices as well as unpatriotic attitudes of the citizens.


The purpose of this project is to identify and provide possible solution to the problems in the Nigerian banking industry.

So, having identified the problems to which this study address itself, the researchers shall in this work, make a critical insight into the problems of banking system in Nigeria and determine the effects and reactions of the situation on the following.

i) The profitability of the bank.

ii) Their reaction to the various policies of the government through

Central bank of Nigeria and Nigerian Deposit Insurance Corporation to correct the irregularities.

iii) The overall impact of these two situations on the bank existence and to their customers.


It is of importance for banks and business organization to know the cause of   the problem in the banking industry and the possible ways of solving them. It will also aid most banks and business organization to realize the need to encourage the growth in Nigerian banking industry. That our banks should not be allowed to die having lived to their responsibilities. The projects will also make Nigerians realize the need for hones try, handwork and patriotism so as to encourage and inculcate banking habit not only to the masses but also to the rural dwellers. Also, this project will serve as material for future research, economists and the economy of the country.


The terms used in this work needs to be defined to facilitate the understanding of the reader. As one of the greatest Greek philosophers Aristotle (348-322BC) would put it, he says, “Before a discussion can be intelligible there must be a definition of terms.

Definition of bank or banker: It can be defined as any person or corporation that provides the minimum banking services and which is licensed as a bank by the federal government of Nigeria as a banking institution.

Banking system is the system at which bank operate.



Account Number: 0709546102

Access Bank: Savings
Account Name: Emmanuel Idorenyin Samuel.

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