The problem of fraud in our banking system may have some attachment. Therefore, there must be some factors that may have lead to this fraudulent act.
The problems are stated below:
- Bank malpractices
- Failure to appoint trusted and honest official as the banks representative in the clearing house
- Failure to change representative on regular basis
- Failure to provide locked boxes or bags for carrying cheques to and form the central banks
- Inadequate training facilities for clearing staff both in the offices and central bank
- Negligence in checking clearing cheques from the banks to avoid a case of possible short change of cheque
The above statement indicate big time fraud which occurred in banks due to poor negligent handling clearing cheques, bank management and officials have been indicated and out rightly punished for failing to do their job or doing it negligently to a part that created an enabling environment for fraudulent practices in the bank.
According to Agbadua (1980) fraud is an anti economic process and must properly be dealt with. He made it clear that for nay banking institution to stand, there must be proper management and trusted worker that are psychologically fit before employment. Ade and Wole (1982) see fraud as a virus which spreads from the banking sector to other economic activities and organization even the government and that for nay economy to be balanced, an antifraud virus should be injected to the banking industry to completely eradicate fraud from the system.
In the Vanguard Newspaper (02/01/2004) it was said that fraudulent practices that led to the fall of so many bank and organizations in time past thus step have been taken by the government by introducing an agency called The Economic and Financial Crime Commission. This agency serves as a watch dog to financial institution, organization and even the government.
Authors will enter a most expanded area of procedures to detect fraud as they implement State Security Agency No 99 the new standard aims to have the auditors consideration of fraud seamlessly blended into the audit process and continually updated until the audits completion of such findings.
They usually describe the information as a means to check fraudulent activities and practices.
THE BANKING SYSTEM IN NIGERIA
There has been a great deal of interest in this topic of late! There is what I have been able to glean.
The directive to increase the capital base of Nigerian bank is an attempt to make banking more stable the perception was that a number of small banks were too vulnerable to large default, and to prone or accountability and corruption. That is the more reason why most small banks merged and Nigerian ended up with some relatively number of better capitalized and accountable banks.
The banks can now be able to make more longer term loans than before enhancing Nigerians ability to finance development project locally.
Thus the bank resources are divided into ordinary capital resources. The bank had its initial lending operation to assists African countries form the loans it obtained at concessional rate form the government of Austria, Canada and Sweden these loan were granted to the bank in the respective currencies of these countries, the most recent of such borrowing from foreign source was that of the fur billion Japanese Yen borrowed from the export and import bank of Japan.
One of the provision of the agreement is that the bank should always apply, sound banking principle to its lending operation in any case, such operations can be within it member states. Also the agreement provides the total amount of loans and guarantee outstanding respect of the ordinary operation of the bank must not at any time exceed the total amount of its unit impaired subscribed capital reserves, capital resources included in it ordinary capital resource expect the special reserve. Another provision is that in the case of loans made by the bank out of its proceeds of borrowing of which call able capital can be allocated.
The amount of principal outstanding and payable at the bank of principle outstanding in respect of borrowing by the bank payable in that country.
THE LAW OF BANKING
Various regulations were revealed by some institutions. According to the Swiss Bank Luxembourg and in conjunction with the World Bank, some regulation in establishment and running of a bank were made under section one page 15 and 18 of banking law it was stated that before a bank is established, it must undergo the following:
- Must be fully registered under the incorporated of the banking union
- Must be under a central bank of the country been located
- Must have a reasonable capital of about 50% to start up with
- Must be able to afford professionals on its operation other laws also cover the insuring of loans, grant and other daily operation
