Bank Supervision as a Tool for Banking Industry Safety and Stability

Reference code: P003

ABSTRACT

This Seminar paper investigated the use of bank supervision as a tool for attaining banking industry safety and stability. The paper shows that bank supervision can be either onsite or offsite. In addition to the above, bank supervision can be approached on the bases of transaction, consolidated or risk based approach although recent literature indicate that risk based supervision is the most prevalent following the recommendations for the adoption this method for effective supervision. Furthermore, the paper indicates that bank supervision in Nigeria is the joint responsibility of the NDIC and the CBN in accordance with established standards of The Basel Accord for bank supervision. Thus, the CBN in collaboration focus on core banking operations during supervisions. These core banking operations include the following: capital requirement, loan concentration, liquidity ratio, provisioning, internal control and management among others. The supervisory authorities compare the performance of deposit money banks to already determined standards and templates. Where they fall short, corrective measures are set in motion. finally, the paper shows that bank supervision by the CBN as much as possible strives to comply with the supervisory guidelines and standards. 

1 INTRODUCTION

2 CONCEPTUAL FRAMEWORK

2.1 Transaction Based Supervision Approach

2.2 Consolidated supervision Approach

2.3 Risk Based Supervision Approach

3 THEORETICAL FRAMEWORK

4. SUPERVISORY ACTIVITIES OF CBN AND NDIC

Capital Requirements

Loan Concentration

Liquidity Ratio

Provisioning

Internal Control

Management

5 SUPERVISORY GUIDELINES & STANDARDS

Prudential Guidelines

Statements for Accounting Standards

Other Regulatory Directives

6 CONCLUSION 

REFERENCES

Reference code: P003

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