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Generally, a bank’s involvement with OBS banking is to boost fee income and at the same time avoid stringent capital requirements as compared to the traditional on-balance sheet engagements.  However, just as they occur in on-balance sheet transactions, OBS operations involve some risks which are, in principle, not different from those associated with on-balance sheet business. 

 These risks include market/position risk, credit risk and operational/control risk.  In Nigeria, the total value of OBS activities has been growing both in rates and in absolute Naira value over the years.  Available statistics also indicate that most banks are involved in OBS activities.

Supervisory activities have currently been extended to off-balance sheet transactions.  This is because a bank that engages in off-balance sheet transactions is increasing its risk exposure.  In the event that a client fails to meet up his obligations, the bank will be liable to pay the third party.