By far the most prominent banking legislation of this period was the banking act 1969 which repealed and replaced the banking ordinance of 1958. [4] The year 1947 shows the emergence of an agricultural bank called the Nigerian Farmers and Commercial Bank. The objectives of the guidelines are to: 1. Banker to other banks in Nigeria and Abroad. However, the feeling of some nationalists was that what was needed to address the problems confronting the industry was a central bank which would play a more wide ranging role in the economy and which would be better placed to take over and exercise the regulatory and supervisory powers then vested in the financial secretary. But, let’s stay on our topic and begin to mention some significant years in the modern Nigerian banking history, from 1990 till date. (2008) said that microfinance banking in Nigeria is guided by the microfinance regulatory policy and guideline of 2005. The Banking Ordinance of 1958 was to further regulate the banking industry. In 1892, the African Banking Corporation and the Bank of British West Africa, now First Bank of Nigeria, were established in Nigeria. Activities of the regulatory bodies From the vantage position of majority, ownership started upward mobility of Nigerians into top management positions and directorship in banks as well as other areas of the “commanding heights” of the economy. Five replacements were named with immediate effect including Funke Osibodu to lead the Union Bank of Nigeria and Suzanne Iroche who took over as CEO of FinBank. This paved a way for the government to exercise control over the organizational structure of banks including the spread of ownership and choice of directors and top management, which controls have continued up till today. The origin of modern banking in Nigeria dates back to 1883 when the African banking corporation was established followed in 1884 by the establishment of the British bank of west Africa. The primary legislation for the regulation of banks in Nigeria is the Banks and Other Financial Institutions Act (BOFIA) which, with the Central Bank of Nigeria (Establishment) Act 2007 (CBN Act), gives the Central Bank of Nigeria (CBN) powers to supervise and regulate banks and other financial institutions in Ni… The remaining 17 banks held 38% of the market-share in total. every application for a license must be in writing and routed through the central bank. The primary legislation for the regulation of banks in Nigeria is the Banks and Other Financial Institutions Act (BOFIA) which, with the Central Bank of Nigeria (Establishment) Act 2007 (CBN Act), gives the Central Bank of Nigeria (CBN) powers to supervise and regulate banks and other financial institutions in Nigeria. Banker and financial adviser to the federal government and. Generally, investment banking is an industry that has been driven by policy or regulation. Whereas, the NEP Act 1972 was silent on banks. In 2010, the Central Bank of Nigeria re-modified the existing universal banking model that permits a commercial banking license holder to operate in other non-core banking, either directly or indirectly, through designated subsidiaries. The banking ordinance 1958 thus marked the beginning of joint function between the federal ministry of finance and the central bank of Nigeria {CBN} on the other, as regulatory authorities which remained until it was formally brought to an end by legislation in June 1991.by that time, it had become glaring that the involvement of the federal ministry of finance as the apex regulatory institution and an intermediary between the CBN and the federal executive council no longer served any useful purpose since the prevailing circumstances in the banking industry had become very different from those which prevailed in 1958. [9][10], The Asset Management Corporation of Nigeria AMCON was established in 2009 by the National Assembly of Nigeria. The resultant feeling of alienation fueled the nationalist of the nationalist of the wholly indigenous banks in Nigeria. The bank liquidated in 1930 and was replaced by Mercantile Bank in 1931. [1] The banking system in Nigeria is regulated through the Central Bank of Nigeria. You come up with an innovation to disrupt financial inclusion, the Central Bank of Nigeria (CBN) gives you a pat on the back then gives you a licence while traditional banks look forward to their own demise. Consequently, many of the banks then in operation had to effect a transfer of shares to Nigerians as to comply with the statutory requirement. What is regulation: A rule or directive made and maintained by an authority. [8] This resulted in rebasing of commercial banks from ₦2 billion to ₦25 billion, while the 89 existing commercial banks in the country became 25. Provide minimum standards and requirements for agent banking operations. Therefore, activities of financial regulations, or bank and banking supervision serve as an equilibrium position where law and economics meet, in other to embrace a more pragmatic approach, especially regarding to Banking supervision in Nigeria; we have to go a little bit further, not limiting ourselves to strict law. This method of e-banking dates back to a few years ago. It was created in 1958 as a result of the need to make up for the banking deficiency of WACB (West African Currency Board) and foster the development of the capital market as well as the money market at large. It is worthy of note that WACB had been operating prior to the establishment of the Central Bank of Nigeria. Establishe… The main thrust of the legislation was to strengthen the powers of the CBN while preserving its functions under the 1958 ordinance. Government regulation of banking practices in Nigeria only commenced with the enactment of the first Banking Ordinance of 1952 following the alarming rate of failure of licensed indigenous banks in the early I 950s. The banking industry in Nigeria started during the colonial era with the establishment of Colonial Banks, with the primary aim of meeting the commercial needs of the Colonial Government. Like its predecessor, the banking act of 1969 stipulated that no person could transact a banking business in this country unless it was an incorporated company holding a valid banking license granted by the finance minister {s.1}. During the 1960s decade, the CBN act was amended not less than eight times. In 2010, the Central Bank of Nigeria made changes to the then existing banking model. Owing to the fact that these banks were established to protect the interest of their foreign owners their policies were discriminatory against indigenous businessmen who, being denied credit facilities in these banks, were effectively excluded from the mainstream of the economy. The 1952 ordinance introduced for the first time legal requirements as to the establishment and operation of banks. It provided that no company can carry on banking business in Nigeria unless it holds a license for that purpose granted by the financial secretary. In 1991, the commercial banks were introduced in Nigeria by the same name decree. This level of concentration was confirmed by the Herfindahl-Hirschman Index (HHI) for assets which stood at 774.50 by the end of 2016. The reform also addresses excessive banking interest by the creation of a non-interest bank. A regulation many be used to prescribe or proscribe conduct. The banking system in Nigeria is regulated through the Central Bank of Nigeria. Maintenance of external reserves so as to safeguard the international value of the currency. Its report laid the foundation for the enactment of the banking ordinance of 1952 which marks the beginning of banking legislation in this country. The bank is now known as First Bank of Nigeria. Thereby permitting the holder of a commercial banking license to function in other non-core banking sectors, either directly or indirectly through stipulated subsidiaries. History of Mobile banking. This article reviews the regulatory regime for banks operating in Nigeria, covering key legislation and the activities of the regulatory authorities, among other things. There was no banking legislation until 1952; at that time, Nigeria had three foreign banks and two indigenous banks with a collective total of forty branches. This apex bank started operation on July 1, 1959. From then on till today, the use of ATMs has spread across all banks and customers in Nigeria. The banking industry in Nigeria started during the colonial era with the establishment of Colonial Banks, with the primary aim of meeting the commercial needs of the Colonial Government. Nigeria: Data Protection Laws and Regulations 2020. The decline in barter system of trade and the rise in financial transaction of the colonial government required an institution in the form of commercial bank for safety and transmission of fund. This paper seek to explain the trends and impact of financial regulation on the Nigeria’s banking sector after the bank consolidation exercise in 2005. How to get on top of your finances in 2019, The 2020 top banks in Nigeria by Shareholders’ funds, The 2020 top banks in Nigeria by earnings, Key requirements to access loans in Nigeria. Can You Still Get a Loan After Bankruptcy in Nigeria? For banks operating in Nigeria, see, International Financial Reporting Standards, "THE EVOLUTION OF NIGERIAN BANKING SYSTEM, SUPERVISION AND CURRENT CHALLENGES", "Central Bank of Nigeria:: History of the CBN", "Nigeria political parties: power in an emergent African nation", "Money and banking in British Colonial Africa: a study of the monetary and banking systems of eight British African territories", "CIRCULAR ON THE REVIEW OF THE UNIVERSAL BANKING MODEL", "CBN to introduce three types of banks in 2011", "CBN releases guidelines for new banking model", "Banking reform and its impact on the Nigerian economy", "Structural effects of banking industry consolidation in Nigeria: A review", "Nigerian banking reform: Recent actions and future prospects", "Nigeria's Banking Reform above the Curve", "Jaiz Bank enters profit-making territory, declares N158m for shareholders", https://www.cbn.gov.ng/OUT/SPEECHES/2012/GOV_WARWICK_150211.PDF, https://en.wikipedia.org/w/index.php?title=Banking_in_Nigeria&oldid=982741308, Creative Commons Attribution-ShareAlike License, This page was last edited on 10 October 2020, at 01:35. 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