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Problems Of Money Transmission In Nigerian Banks(A Case Study Of United Bank For Africa Plc)



Money Transmission


This project work titled problems of money transmission in Nigeria banks (A case study of United Bank for Africa Plc Okpara, Avenue, Enugu) is intended to evaluate the problems of money transmission in Nigerian banks.  Towards this end, the researcher employed questioners, interviews and secondary sources of data such as text books to source the data for the researcher work. The researcher also employed percentage frequency statistical techniques that analyze the collected data.  The researcher discovered or that analysis of data that there is a serious inefficiency and ineffectiveness of communication network in the country Nigeria which hinders effective money transmission services etc.  It therefore recommends that the bank, the Central Bank of Nigeria (CBN), the monetary authorities as well as communication service providers should evolve a more effective policy(ies) that would and growth of the bank and in Nigeria economy general.  Also efforts should be geared towards ensuring steady power supply needful in effective transmission and communication networking.




1.1      Background of the Study

1.2      Statement of Problems

1.3      Objective of Study

1.4      Research Questions

1.5      Research Hypothesis

1.6      Significant of Study

1.7      Scope and Delimitation

1.8      Definition of Terms



2.1  Payment system in Nigeria Bank

2.2      Channel of Money Transmission

2.3      Money Transmission Instrument

2.3.1                Cheque

2.3.2                Funds Transfer and Settlement System

2.3.3                Automated Clearing Operations

2.3.4                Automated Clearingof Direct Credits, and Direct

Debit Instruments

2.3.5                Draft

2.3.6                  Mail and telegraphic transfer

2.3.7                Money and postal orders

2.3.8                Money gram and western union

2.3.9                Standing Orders

2.3.10            Credit Transfer

2.3.11            Problems of Money Transmission in Nigeria banks



3.1  Area of Study

3.2  Population of Study

3.3  Sampling Method

3.4  Research Instrument

3.5  Validity and Reliability of Research Instrument

3.6  Questionnaire Administered

3.7  Analytical Techniques

3.8  Sources of Data



4.1  Presentation and Analysis of Data

4.2  Test of Hypothesis



5.1  Summary of Findings

5.2  Recommendations

5.3  Conclusions





The banking decree of 1969 in defining the banking business incorporated all the functions of the institutions.  However, in terms of what services banks offer to the public, three stand out distinctly deposit and payment mechanism, finance and credit and money creation.

The role the banks play by facilitating payments for goods and services without the need to hold hand to hand currency cannot be overemphasized.  By the use of the deposit and payment by cheques the settlement of debts by means of coins and note have become unnecessary.  In the definition of money supply, demand deposits are distinguished from time deposit because cheques are in most societies, generally accepted means of payment.

Consequently, in a system where the payment mechanism does not allow for the force and full use of cheques, it becomes unnecessary and anomalous to distinguish between demand deposit, and hand to hand currency on the one hand and time deposit on the other hand.

The next role-played by banks and which is of tremendous interest to businessmen is that of providing finance and credits for business.  The bank serve as intermediaries between lender and borrower. In the process of lending banks creates money by borrowing to investors who pay interest on these funds given to them.  How much a bank can create money depends on their reserve ratio.  Banks increase and decrease the quantity of money in circulation through their actions.

Having discussed these categories of services; I do intend to appraise how adequately the banks have succeeded in providing

these services to the Nigerian public.  Section 39 (11) of the central bank of Nigeria Act 1958 requires the central bank to “promote and maintain as three to four months to be cleared, in spite of the provision of a maximum period of 21 working days from the data of lodgment as stipulated by the Central Bank of Nigeria (CBN) in the “Bankers Tariff.

In some cases, customers are allowed to cash their open drafts over the counter because the draft over, did not arrive until months after the drafts have been presented for payment.  Statements of account are not sent to customers regularly.  In other cases, standing orders are delayed.

Some of the incidents have attracted public criticisms, this made the author to develop interest in carrying out a research into the problems of one of these services, rendered, money transmission.


There are many services which the banks render in our economic system and which people criticize of being inadequate, money transmission appears to be the least resolved in terms of solutions for optimization. A lot of writers on this issue, have blamed the poor state of this service on dearth of effective communication in Nigeria, the tendency for banks to be reasonability careful because of the high rate of fraudulent activities involving both the public and some bank staff, such as unauthorized printing of bank stationary like fake cheque books, bankers draft, tellers and robber stamps.  Others include manipulating of computer records, signature forgery and nonchalant attitude by staff as regard their duties.

Among these possible causes of inadequate money transmission in Nigeria, there have been possible solutions.  However, it is pertinent to mention that most of the literatures written on this topic lack the merits of an empirical study.  In spite of the numerous solutions offered, the service of money transmission in Nigeria has remained inadequate.


This indicates that the central bank of Nigeria in turn requires the commercial banks to provide adequate services to the Nigerian public.  Indeed the Central Bank of Nigeria can be said to set the machinery for the promotion and maintenance of adequate and reasonable banking services to the public.  They take such steps by publishing the bankers tariff which set out the amount of charges to be paid by the public for certain services and those that are expected to be free, the length of time, certain transaction are to be completed, charges for consortium lending.  But the issue is how effectively are these specification followed and hence how adequate are our banking services.


Commenting on inadequate banking services Dr. Pius Okigbo, a banking consultant said: Banking services can be adequate only if the customer does not have to go through pains to obtain these services.  They can be obtained these services.  They can be adequate if the customer does not have to travel a long distance to find a banking faculty.  They cannot be adequate if the customer has to suffer humiliation and wait endlessly in long queens to deposit or withdraw his or her money.  They cannot be adequate if the commercial banks cannot rely on other institutions to provide ancillary services.

These excerpts or passage from Dr. Okigbo highlights some of the amply in the provision of adequate banking services by our commercial banks.  The following are district without commercial banks such as:

The problem of under banking in terms of the number of banks and banking offices per square kilometer as well as in the density of banking officers per unit of population.

Delay in our banking system.  A visit to any banking hall of any bank anywhere in the country spell long queues.  These often lead to ways of seeking preferential attention.

Lack of financial infrastructure to support commercial banking.  The delay in transferring money from one place to another, cheques take as long one to two weeks on the average.


In any research work, the set out of clearly defined objectives is the bedrock of any project work like this in Nigeria, money transmission is very relevant services in the state. It can be summarized below:

  1. To find out whether ineffective communication, both postal and telecommunication services, inhibit effective money transmission in Nigeria.
  2. To find out whether efforts to guard against fraud by banks, effect negatively, their ability to render adequate money transmission services.

iii.         To find out whether there are anomalies in our banking system that inhibit effective money transmission in Nigeria.  This will also include attitude of bank staffs.

  1. To also recommend ways of improving money transmission Nigeria based on the findings.


Generally, the concern of this study is top evaluate the problems of Money Transmission in Nigerians Banks, as follows:

  1. How long do customers spend for a normal clearing of local cheques?
  2. What do you think is reason for this time wasted?
  3. What methods are used in sending up country cheques?
  4. How often customers do made use of over draft?
  5. Does this system of money transmission proved effective?


The following hypothesis is to be tested with chi-square approach.

Ho: Most of the local cheques are not cleared in a short period of time.

Hi:   Most of the local cheques are cleared with in three days of transaction.

Ho: The customers are often wasted much time in clearing up country cheques.

Hi:   The customers do have little or no delay in clearing up country cheques.

Ho: There are no particular means that can be use in sending any cheques.

Hi:   There are so many means that can be use in sending out up country cheques.

Ho: Most of the customers are not aware of bank draft services and its products of united Bank for Africa.

Hi:   Most of the customers are aware of over draft services and its products of united Bank of Africa.

Ho: The systems of the bank with its customers are ineffective.

Hi:   The systems of the bank with its customers are ineffective.


There have been criticisms about the banking industry in the way render services to their customers. They do not see the customer as king. The researcher wants to carry out a research on what banks do and to fashion out the problems facing Money Transmission in Nigeria Banks. The researcher also wants to have an empirical base either to support all the sources about the poor impression people have of the banks and to advice them on how to improve their services by adopting a lasting solution on the problems of Money Transmission Services they render to the general public. This study will enable other financial institutions to tackle their problems which will be very useful in developing Nigeria Banks thereby bring positive change in our economy. Individuals are not left out, it will assist them in transferring huge sum of money from one country to another. As Nigeria presently operates a cashless economy. Also cheques are not readily acceptable in transacting business or making purchases in view by ban in checking the system. Adds to the delay of several weeks before amount can be received. All these as resulted to the disenchantment about Money Transmission Instruments. People preferred to carry huge sum about with out mineding the risk involved. There have been numerous cases of money businessmen rendered useless by armed bandit while carrying about large sums of money.  Many company have been raided by armed robbers while carrying huge sums of money intended to be used as staff salaries.  This research is necessitated therefore by the need to identify the causes of inadequate money transmission service in Nigeria, recommended solutions for their improvement and effective utilization and save Nigerians from bad economy.


This research work intends to define some terms, and burg our full meaning of some observations, which will help the reader in understanding the contents in the study work.

         Bill of Exchange:-     The ordinance defines a bill of exchange as “an unconditional order in writing, addressed by one person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to a specified person or bearer”.

        Cheque:- This is an order on the bank, written by the drawer who has deposit with the bank to pay on demand the stated sum of money to the person named in the cheque.

       Banker draft- It is a bill of exchange drawn by a bank on another branch office of the same bank. The bankers draft is issued at the request of a customer who wishes to transfer money from his account to that of a beneficiary.

Travelers Cheque: This is an instrument that bank issued to their customers in internationally acceptable currencies. It is for customers traveling abroad.

       Bank Fraud: It can be defined as a conscious or deliberate effort aimed at obtaining unlawful financial advantage at the detriment of another person who is the rightful owner of the fund. The increasing incidence of frauds and forgeries in our banks in recent years if not arrested might pose certain threats to the stability and survival of individual banks and performance of the industry as a whole.

       Promissory Note: It is earliest type of credit instrument. It is an “I.O.U” (I owe you) a written promise by a

        Standing order:- A customer who has regular payment to make such as electricity bill, water bill, school fees, insurance premium can authorize his banks to make payment on his behalf through standing order.

Money order:- It is a means of transferring comparatively small sum of money from one country to another through the agency of the post office.

       Telegraphic transfer:- It is an instruction from a bank in one country to another bank in a foreign country requesting it to transfer some of the balance on the instructing banks account to the person named on the transfer.

Mail Transfer: It is an instruction from one bank in one country to another bank in over seas to transfer some money on the instructing banks account to a named beneficiary.

Money transmission:- This is defined as a process of transferring cash from one person to another through the means of cheques, drafts, mail money or postal orders and standing orders.

Negotiation Instrument: An instrument is said to be negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the instrument. An instrument from the transferor to the transferee by delivery.

Forgery:-       This may be defined as fraudulent making or alteration of a writing to the prejudice of another men’s right.

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