Problems Facing Commercial Banking in Nigeria
Below are some problems facing Commercial Banking in Nigeria:
1. Lack of necessary collateral securities: Most prospective borrowers do not possess this quality and it reduces lending power which affects banks prospects.
2. Non–repayment of loans: Many borrowers do not repay their loans. This has adverse effects on the banks involved.
3. Concentration of banks/branches in urban centers: This denies commercial banks to have access to rural funds.
4. Strict government control: This limit the activities of many commercial banks e.g special deposit called for by the central bank automatically reduces lending power of banks.
5. Limitation of the use of cheques.
6. There are a lot of fraudulent activities by bank officials and customers of some banks which can lead to these banks going into liquidation if these negative activities are not discovered.
7. Unnecessary government intervention adversely affects commercial banking in Nigeria.
8. Illiteracy: Many Individuals lack the knowledge and skills to manage financial resources. It is only when the vast majority of the Nigerian population is financially literate that they can participate in the formal financial system, by becoming aware of and taking advantage of its opportunities, get financially included, and thereby contribute to the financial and economic development of Nigeria.
1. How do commercial banks create money?
2. List and explain two examples of Banking Financial Institution.View Answers