ANALYSIS OF LEGAL FRAMEWORK FOR PREVENTION AND PUNISHMENT OF BANKING MALPRACTICE IN NIGERIA

Abstract

This article examines banking malpractice as a major threat to the stability of financial institutions, particularly the banking sub-sector, following the liberalization of the financial sector under the Structural Adjustment Program (SAP). Banking malpractice has had devastating effects on depositors and the Nigerian economy as a whole. Despite the existence of laws, regulations, judicial decisions, and ongoing reforms by the Central Bank of Nigeria, Nigerian banks continue to rank among the least stable in international ratings and have not been sufficiently proactive in addressing the fundamental challenges affecting the banking industry.

This situation may be attributed to weak legal frameworks and a lack of political and judicial will to enforce existing laws effectively. The study adopts the doctrinal legal research methodology, focusing on the various legal frameworks established for the prevention and punishment of banking malpractice in Nigeria.

The article recommends, among other measures, the establishment of clear regulatory objectives, the development of regulatory mechanisms that balance efficiency with effective service delivery, the promotion of sound corporate governance, and a clearly defined role for regulators in fostering competition. It also advocates granting greater financial independence to regulatory institutions and agencies to enable them to effectively discharge their statutory responsibilities within Nigeria’s banking sector.