CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
There appears to be little about the fact that fraud in banks is a matter of the greatest concern to bankers, the monetary/ political authorities and the generality of Nigerians today. It is so for many reasons. The methods acquire sophistication by the day. The size increases in geometric progression. The people involved hitherto were among the respectable members of the church, the mosque, the community. Also, the results” of the incidences are damaging. Frauds lead to unwarranted losses for the banks and put the management and energies on fraud prevention and detection. Equally importantly, every incidence of bank fraud literally chips off a bit of the public’s confidence in the orthodox financial institutions that banks are, and delay or slowdown the full development of banking habits in Nigeria. Fraud in banks contains, largely, experiences of practitioners in the banking industry, people that have had to inevitably deal with the problem. It should therefore be a very useful of information to bankers of all grades, to students and to all interested in the minimization of fraud in our banks. In view of these, fraud is a number, one enemy to all concerned with the growth and development of the financial industry. Any effort to fight this enemy is therefore most desirable.
1. 2 STATEMENT OF THE PROBLEMS
Frauds are not new in banks. They are as old as the industry itself. However, in recent times, the rate and frequency at which they occur have been a cause of great concern to management of all banks in Nigeria. Banks lose millions of naira in various frauds yearly and despite concerted efforts, by individual bank management and by the committee of Chief Inspectors on the one hand the Banker committee in the other, the wave of frauds in banks has continued to be on the increase. The attack on bank fraud by the fraudsters is as a result of the belief by many Nigerians that the banking sector is the most profitable sector of the economy. They believe that the banks make a lot of profit annually and are always liquid. Consequently, any amount of financial loss to a bank will not materially affect its existence. This is incorrect. The examination of the account of some banks, will show that some banks cannot even fully provide for loses sustained through fraud in their accounts. The fear is now common that the increasing wave of fraud in banks in recent years, if not arrested may pose certain threat to the safety, survival and stability of individual’s banks and their performance. It also results in huge financial in stability of individual banks and their performance. It also results in huge financial losses to both the banks and their customers as, well as loses of confidence in the affected banks, which eventually bring about their closure or liquidation or acquisition.