The purpose of this study is to identify and the impact and solution
of Bank fraud an other sharp practice on the Banking Industry in
The research is a primary research in the sense that it is
established to investigate the causes and other sharp practices in
Banking Industry in Nigeria.
The research covers the staff of Nigeria United Bank for Africa Plc.
In this research, the work of many expends in the field of the study
were reviewed. This enables the researcher to know more about the
various ideals of many theorists about the topic.
Data gathered were analyzed in different tables using percentage where necessary an the data were interpreted as well.
The research reveals that the number of Banks involved in friends and
forgeries cases has been on decline over the past few years. Other
findings were there is decrease in amount involved have been on the
increase over the time and this across all the cadre of staff
Conclusion was drawn on the data collected and the recommends were therefore provided as well:
1.1 BACKGROUND OF THE STUDY
The level of fraud in the day Nigeria has assumed an
epidemic dimension. It has eaten deep in to very aspect of a having to
the extent that a three-year-odd-child talks about 419.
Fraud id defined as a deliberate act of deceiving
somebody in all illegal way in order to make to obtain goods belonging
to another party. For an action to constitute Fraud there must be a
dishonest intention and the action, must be intended to benefit the
preparation to the determine of another person.
Going by this definition fraud in Nigeria economy cannot
be restricted to the bank alone. Fraud in the Banks is not know, they
are as old as the Industry itself. However, like in the greater society
they have become one of the most intractable problems of modem day
Other sharp practices that is being perpetrated in the
banking industry includes, embezzlement and theft, miss use or harm the
asset of the bank, manipulation of figures, forgeries but all these can
be compassed into Fraud that is the word “Fraud” can capsulate all
Fraud can be committed by the employers, customer and
management of the bank concerned or others operating independently or in
conspiracy with others inside or outside the financial institution.
The historical trends and analysis of the banking
industry in Nigeria is discussed to assist in the understanding of the
philosophies that will guide prospective reader in the extent to the
bank Frauds had been in place.
Modern banking in Nigeria dates back to the early
colonial period. This is as the period when the activities of
transaction of the colonial government the deadline of the bater system
of frauds and the increasing acceptance of British silver coins, all
desired for constitutions in the form of commercial banks for safety and
transmission of frauds, the importations and distribution British coin,
and provision of credit facilities to the government an the trading
companies (usage 1981).
It was for this purpose in 1872 that the Africa Banking
Corporation of England was invited to open a branch office based in
Liverpool and West African ports.
But due to some difficulties, the bank was taken over in
1894 by Elder Depicter and Company with a name as Bank of British West
African (now First Bank of Nigeria Plc ) Registered in London, the bank
started with a authorized capital of $100,000. Due to the success of the
bank of British West Africa other organizations soon began to show
interest in banking opportunities in the Country. This led to the
establishment of the Anglo-African Bank, later known as banks of
Nigeria, but which became liquidated other were the colonial bank which
changed its name of Barcley bank and company (now the Union Bank of
Nigeria Plc 1919) also British and French bank 1948 (now the United bank
for Africa Plc) and such other foreign owned banks.
However, these banks do not serve any useful purpose for
Nigeria rather they serve as a dear channel for the economies of their
promoters who are most importers and whose activities were based on the
decision taken at their overseas head offices.
In other word the development of conventional banks only
served as instruments of explosion and expropriation of resources from
the Nigeria economy and as such were inconsistent wish local needs,
interest and aspirations to help develop the nation economy.
These among other factors led to the birth of many
locally owned and manage indigenous banks, between 1933 to the period of
1952, as much as twenty-five banks were established by Nigerians. Buts
it is very sad that out of these banks only four survived beyond this
period, they are National bank of Nigeria established by Nigerians in
1933, Agbonmage bank now Wema Bank Plc established in 1945. The present
African Continental Bank Plc established in 1945 and Merchant bank (now
default) established in 1952. Thus the period 1892 to 1952 was described
as the free banking era.
The period 1952 to 1991 witnessed series bank regulations
measure ranging from the Banking ordinance of 1952. Central bank
ordinance of 1958 and its subsequent amendments to the latest Central
Bank of Nigeria decree 24 of 1991 and banks other financial decree 25 of
1991. The essence of these legislations was to stream line and regulate
the performance of the banking industry.
Thus from 1976 to 1986, the number of banks increases
from twenty-one comprising of fifteen commercial and cooperative banks
and six merchant banks to fifty-one banks made up to twenty-nine
commercial banks, and twelve merchant banks. These period was
characterized with the establishment of new generation of private banks
owned by Nigerian and Foreign private investment especially the state
Another period that worth mentioned was the deregulation
era between 1986 and 1992 which was witness by rapid increase in the
number of banks from forty-one banks in 1986 to one hundred and twenty
in 1992 which was made up to sixty-six commercial and banks, fifty-four
As earlier mentioned in the introducing bank, Fraud had
its origin from the day of the banking industry started in the country
and in as much as the federal government through central bank attempt to
solve this problem among others by promulgating different banking
legislation, titles or no success was achieved in this regard.
1.2.1THE OBJECTIVE OF THE STUDY
(i) To find out the causes of fraud in banking industry
(ii) To identify the impact of fraud in banking industry
(iii) To make recommendation and suggest solution as well to solve the problem of fraud in Nigeria banking industry.
Also, the objective of united bank for African a case study of the project work are:
(i) Prevention of banking failure
(ii) Protection of the bank system against destructive runs in the events of bank failure.
(iii) To protect the small savers who are unlikely to
have access to sufficient information that would enable them to evaluate
the solvency of these banks where they hold their savings.
(iv) To ensure fair play among the competing banks and
thus lead to their innovations and efficiency. The U.B.A was established
with the objectives due to the effect of structured adjustment program
(SAP) and the current deregulation of banking systems this frauds to
encourage some banks to take greater risk with customer deposit and
because of the federal government directive, it direct financial
supplier of banks and such other deposit taking institution that are
facing problem of solvency.
1.3 PLAN OF THE STUDY
This study is divided to five chapters, chapter one is on
general introduction of the topic, chapter two is frame work o the
study and literature review methodology. Where focus on sampling
techniques. Chapter three focuses on the research methodology, which
deals with sampling techniques, chapter four deals with analysis of data
which focuses on the method of collecting test of hypothesis, chapter
five is on summary conclusion and policy recommendation.
1.4 SCOPE OF THE STUDY
The study is intended to give broader view of bank Fraud
and other sharp practices like Forgeries, Thefts in banking industry,
which is the pilot of Nigeria financial system and the Nigeria economy
As a result of the inability of the researchers to cover
the entire bank in the country. The researcher has reduced the scope o
the study to data collected from U.B.A. It will however be supplemented
with a review of contribution in the daily newspaper, magazines and
various professional journals in respect of the subject provided it is
1.5 SIGNIFICANCE OF THE STUDY
The study will promise on those bank executives individual and other
corporate who perpetrate fraud taking into consideration the impact on
the customers shareholders and Nigeria economy at large. It will help
the future researcher and the public most especially the bank fraud and
know how to get it curved.
Also, it will put conscious and prudent executives on the
alert as to identify and tract of fraud whenever they occurred , these
would be made known from the result of this project work.
1.6 LIMITATION OF THE STUDY
These are same limitation, which handicapped the researcher to make
adequate and proper research of this study. These limitation are these
inability of the researcher to set enough facts, most the workers or the
affected staff interview could not guide adequate and reliable fact
that are needed for the study.
Most of ten than not, when the office who could give
adequate information are contacted, they always found to be too busy and
the title time they could spare to attend to the question of the
researcher were not always enough to discuss on some other issues which
could have also help the researcher in this study.
1.7 DELIMITATION OF THE STUDY
The word banking industry is too broad for the researcher to know the
impact of fraud on it. That is why he deliberately restricts himself on
an aspect of it, which is United Bank for Africa Plc in other to have
98% accurate if not 100%.
1.8 FORMULATION OF HYPOTHESIS
This research intended to be carried out by making use of both
primary and secondary data. Some of the primary data will be collected
through secondary data.
Also, the researcher is also aiming at collecting data
from various journals, newspaper, and magazine and read books for the
collection or relevant facts for the study.
1.9 DEFINITION OF TERMS
Fraud is defines as a deliberate act of deceiving somebody in all
illegal way in order to make money to obtain goods belonging to another
party. For an action to constitute fraud there must be a dishonest
intention and the action must be intended to benefit the perpetration to
the determinant of another person.
i. BANK:- This is define as financial institution where
money, securities and other valuables are kept and paid, issued
borrowed, lent or exchange.
ii. DIVIDENDS:- This is the money that is been paid to the shareholders by the company for making use of their funds.
iii. FRAUD:- Is the use of deception for unlawful gain or unjust merit.
iv. PROFITABILITY:- Is the yielding of a financial merit or other benefit.
v. FRAUDSTER:- A person that commit fraud.
vi. PERPETRATE:- This is to commit a crime or something bad.
vii. SCRUTINIZE:- This means to examine with care and in detain.