CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The practice of modern banking in Nigeria date back to 1982, the pioneer banks were understandably expatriate institutions set up to facilitate the Colonial administration as well as trade with British.
In 1952, the first indigenous ordinance was made; this ushered in the era of formal banking practice in Nigeria, it established standard before license is granted to operate banks.

This was applicable immediately on New Banks and a period of three years was given to all existing banks survived, they include; Agbomagbe bank, African continental Banks, national bank and mercantile bank.

The ordinance was later replace with first indigenous banking act of 1959, and has undergone series of amendment in 1972, 1975, 1979 and was fully consolidated by 1990 company and allied matters decree and currently called bank and other financial institution decree of 1991 (BOFID).
At this period, a motion was sponsored in the federal legislation for the establishment of a central bank but a complaint was made that there was no developed capital market.

However, there were persistent calls for the establishment of a central bank Mr. J.L Risher was appointed to examine the desirability and practicability of establishing a central bank. Although fisher recognized the contribution of a central bank towards improvement and performance of indigenous banks he however, did not see the need for a central bank, he recommended only a more use of the financial secretary’s power (finance minister).

The international bank for reconstruction and development (World Bank) in 1953 also raised a motion in favour of the establishment of central bank was finally raised by Mr. J. B LOYNES, the formal adviser to the bank of England.

The report of Loyness committee, favoured the establishment of central bank.
On March, 17th 1958, the central bank ordinance was made, however, the central bank did not start full operation until 1st July 1959.

The ordinance of 1958 has gone through series of amendments in 1962, 1967, 1967, 1968, 1969, 1970, 1972, 1976, and 1987 law later repealed and replaced with 1991 central bank decree. Since its establishment, the central bank has laid the foundation for sound financial system.

It also stand as the apex bank in the financial system and helps in the implementation of monetary control, it also acts as the apex regulatory authority in the banking industry, for the supervision and control of banks, section 1 of BOFID 1991 state the function of central bank.
In 1972, the establishment of the banking enterprises promotion decree affected for all sensitive sectors of the Nigerian economy was restructured to 60:40 indigenous and foreigners respectively. This is a view to take active control of the economy from the land of foreigners.

The banking sector being one of the sensitive sectors of the economy was also affected.

This gives rise to the establishment of more banks by indigenous entrepreneur.
Another factor that encourages the establishment of more banks at this period was the oil boom, which sustained an increase in capital flow in the macro economy hence, enhanced the profitability of banks ownership by Nigerian entrepreneur; therefore, at this period more banks were licensed and established.
In 1986, followed the implementation of an economic structural adjustment programme.

This led to the deregulation of the financial system in 1987, entry into banking institutions increased such that the number of a total 42 banks in 1986, the number of licensed banks increase to 120 at the end of 1992, giving an annual average growth rate of about 31 percent with the removal of control of interest rates, banks deposit jumped from about N20.5 billion in 1986 to N58 billion at the end of 1992, an annual growth rate of 55 percent.
Similarly, total assets of bank increased from N68 billion in 1986 to about 232 billion at the end of the year.

Sage and sound banking practice be restored in the banking system.

Can the competitive and creative ability of banks to greater efficiency instead of distress?
There is no need for promote bank ethnics and conduct despite various reforms and new improved banking practices can confidence be restored in the banking sector.

Does the adoption of the deposit insurance scheme have any justification in fair compensation of depositors of banks during bank failure and liquidation?
The need for this study is also burned out of the fact that there is need to make further research on the role of Nigeria deposit insurance corporation (NDIC) to increase knowledge on previous researcher made.
1.2 STATEMENT OF THE PROBLEM
i. The extent which the NDIC met liquidation and pay off of insured bank during liquidation?
ii. The extent to which NDIC has helped to reduce bank distress through their supervisory activities.
iii. What role the Nigeria deposit insurance corporation has played till date on the Nigeria banking industry.
iv. The positive impact the Nigeria deposit insurance corporation has made in sanitation and reformation of the Nigeria banking system.
v. The reaction and justification of bank to the NDIC.
1.3 RESEARCH QUESTIONS
The research question of the study is intended to review the management deposit money bank towards the Nigeria deposit corporation in the regulation of Nigeria banking sector with particular references to NDIC (Nigeria Deposit Insurance Corporation) Ilorin.
As a result of this, the following questions are;
1. What are the roles of NDIC in the regulation of Nigeria banking sector?
2. What are the effects of Nigeria Deposit Insurance Corporation?
3. How does the banking sector regulate to NDIC?
4. What are the functions of Nigeria Deposit Insurance Corporation?
5. What are the service render by the NDIC?
6. How does the banking sector regulate to NDIC?
7. What are the functions of Nigeria Deposit Insurance Corporation?
8. What are the services render by the NDIC?
1.4 OBJECTIVES OF THE STUDY
The study is carried out for the following 1992, an annual average growth rate of 40%. In spite of these gains continued to deteriorate in 1989, banks were adjusted technically insolvent.
These are:
i. To increase in number in 1990(9) and in 1991, eight has become distressed while fifteen (15) were in various terms of distress
ii. To introduce the idea of structural adjustment programme as a deposit protection scheme
iii. To add more confidence on bank and adverse effect on macro-economic resultant in bank failures.
iv. To encourage the deposit insurance scheme by the Nigeria deposit Insurance Corporation (NDIC) decree no 22 of 1988.
v. To know the institution that was principally meant to insure all depositor on account of bank failure
vi. Lastly, to prevent or reduce in the risk of systematic crisis involving failed and unsound bank practices that are capable of causing breakdown in payment system.