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1.1   Background of the study


The Federal Military Government Decree No 22 the 15th June 1998. There is hereby established a body to be known as the Nigeria Deposit Insurance corporation. There in after in this Decree referred to as the corporation. This corporation is out to insure bank deposit thereby helping to promote safe and sound banking system in Nigeria, protect depositors. Interest and fund the inculcate banking habitant amongst Nigeria.

NDIC is an autonomous supervisory body with power among other, to examine, the books and affairs of insured banks and other deposit taking financial institution operating in Nigeria, to insure their total deposit liabilities with NDIC with the exception of insurer deposits, i.e deposit belonging to the Board member and staff of the insured bank, deposit used as collateral and such other deposit board of NDIC may exempt from time to time.

Deposit insurance is financial guarantee instituted as a measure of safety for the banking system to protect depositors. Deposit insurance promotes the stability of the banking system. It assures the saver that his funds are safe, and that the failure of one bank does not mean that all banks are in danger of failing. The authorized capital of the corporation is N1000m (One thousand million naira) out of which N50m (Fifty million naira) has already been called and up by the federal government of Nigeria to establish the Nigeria Deposit Insurance Corporation (NDIC)

1.2   Statement of the problem

In light of the vita role which the Nigeria Deposit Insurance Corporation (NDIC) play in developing of national economy in their capacity as vector of revamping distress banks, investment and employment opportunities it will be expedient to point out that the Nigeria deposit insurance corporation (NDIC) in all its advancement and sophistication has not succeeded yet in effectively achieving this mission. The reason is not just one of the fact some banks have failed, but that some.

Factors here continued to mediate against the successful performance of the Nigeria Deposit Insurance Corporation. The problem of economic under-development in Nigeria can arguably traced to the fact that NDIC have not been as efficient as they ought to be.

The cause of inefficient of the Nigeria deposit insurance corporation (NDIC) are incompetent management (both shareholders and management executive), capital inadequacy, poor internal control, poor asset quality competition and such factors as economic environment, socio – political environment.

1.3   Objective of the study

Considering the various bottlenecks and adhere distress resolution strategies had not significantly achieve the distress, objective in terms of the safely soundness and stability of the financial system.

This work aims at the development of a more comprehensive framework for prompt and efficient resolution of the crisis the specific objective of this work include.

–       Objectively determine the cause of the present distress conditions in the Nigerian service industry.

–       Access the extent and the depth of the distress situation in the Nigerian service industry.

–       Nigeria particularly during the period 1986-2000 for necessary insight into the operation of the Nigeria financial system

–       On the basis of the findings of the work ascertain the effects of the existing financial policies in the Nigerian financial service industry.



1.4   Research questions

  1. What are the cause of the present distress conditions in the NDIC?
  2. What are the extent and the depth of the distress in the NDIC?
  3. What are the role of NDIC in resolving the bank distress in Nigeria service industry
  4. What role does the personal department of NDIC play in the resolution of bank distress?

1.5   Research hypothesis

Hypothesis one

Ho:   The improvement on workers performance personal department does not affect the institution positively.

Hi:    The improvement on workers performance of personal department affects the institution positively



Hypothesis two

Ho:   Do you believe the inadequate and malfunctioning operation of NDIC does not affect the performance of the institution’s depositors.

Hi:    Do you believe that inadequate and malfunctioning of NDIC affects the performance of the institution’s depositors.

1.6   Significance of the study

NDIC has a very important role it is playing with banking sector, NDIC insures bank deposit thereby helping to promote stability, safety confidence and sound banking system in Nigeria protect depositors interest and further inculcate healthy banking habits. Through the instrumentally of special promulgations by government and the collaborative efforts of CBN, the federal ministry of finance and the federal ministry of justice, the corporation has been able to recover debt otherwise classified as uncollectible as at August 1999, about N7.6 billion has been recovered by distressed banks under the control and management of the regulatory/supervisory authorities, while N35 billion has been recover from debtors of the 31 bank in liquidation.

1.7   Scope of the study

The financial agents whose operations and transaction determined the financial flows of the economy including operators at both the short and long segment of the financial market specifically they include the banks and all other deposit taking financial institutions. The scope of the issues examined is limited by the overall objectives of the study that is

  1. The causes of the present distress in financial service industry.
  2. What could be done to resolve the present distress situation

iii.    The effectiveness of the regulatory / supervision authorities in resolving crisis.

1.8   Limitation of the study

Limitation also has financial under tone coupled with increasing lost of material and transport problems are encountered in interacting with the NDIC official and bank top official like the bank managers sectional heads of current account section accountants etc.

Finally the corporation (NDIC) and other banks may not be milling to divulge certain information due to some reasons such as

–       Exposure to the customers of the bank / NDIC

–       Fear of exposure of the bank performance

1.9   Definition of terms

The following definitions are presented to enable the readers and the time used in the write up.

  1. NDIC: It is a body set up by the federal government of Nigeria to insure bank deposit promote safe and sound banking system and also protect deposit interest.
  2. Bank: It is a financial institution that accept deposit and other valuables for safe keeping
  3. Finance: This term can be viewed from various perspective namely.
  4. The layman’s perspective: They see finance as the volume of money held as cash and cash balance at banks.
  5. The investors perspective: They see finance as the possession of funds when it is wanted for investment.

iii.    The academic perspective: They see finance as the academic discipline that studies the science of fund management which includes the institution that are involved in sourcing fund such as the money market, capital market, foreign exchange market, insurance market and mortgage market institution.


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