ABSTRACT
This project work was under taken to bring out some of the
problems encountered by banks a leading to their customers the result of their
findings and the recommendation of how those problems will be tackled and the
solution. We can find out that from this project, one of the major problems
encountered by banks in leading the repayment of the loans. Borrowers especially
the small scale farmers tacked away in the remote villages behaving that the
loans they recurred are their share of the national cake’’ and they do not make
any attempt to repay their loans.
This project being an analytical research data from secondary source
were mainly used. The information came from CBN regulation, publication
newspapers write ups and annual reports of some of the banks. My finding revues that most of the bank grant
short term loans and they also regard the bank to prevent their statement of
accounts if they do not have account with the bank to prevent a guarantor who
will repay the loan if the customer were unable to met all these their
requirements.
I recommend that the federal government should allow the bank a little
more room to specified because most of the time when the central bank of
Nigeria comes up with her credit guidelines she dose not take into
consideration the loan demand situation in the areas in which various banks are
located of economic situation where some banks hardly get customer.
TABLE OF CONTENT
PAGE
TITLE CHAPTERS
I
APPROVAL PAGE 11
DEDICATION
111
ACKNOWLEDGEMENT
IV
ABSTRACT
V
CHAPTER ONE
INTRODUCTION
1
PROBLEM IDENTIFICATION
RESEARCH QUESTION
4
SIGNIFICATION
OF STUDY
5
DEFINITION OF TERMS 6
RESEARCH
OBJECTIVES
7
LIMITATION
OF STUDY
7
CHAPTER TWO
LITERATURE REVIEW
8-31
IN COMMERCIAL BANK OF CO-OPERATIVE
AND COMMERCE BANK (NIG) LIMITED
IN DEVELOPMENT BANK OF (NIG)
INDUSTRIAL
DEVELOPMENT BANK
IN MERCHANT BANK OF INTERNATIONAL
MERCHANT BANK
CHAPTER THREE
RESEARCH
DESIGN AND METHODOLOGY 52
SOURCE OF DATA /SECONDARY DATA
CHAPTER FOUR
FINDINGS
33-35
CHAPTER FIVE
RECOMMENDATION
AND COLLUSION 36-40
BIBLIOGRAPHY
CHAPTER ONE
INTRODUCTION
Background
of the study.
Domestic bank lending bring out
problems encountered by bank in lending to their customers, these statement
reports the lending policy of a bank at a particular time, the bank activities
and resulting profit or losses during the most recent period and the flow of
resources occurring within the bank during the same period.
Furthermore, to the central bank of Nigeria this will be use to them
because they have to adjust their already stipulated credit guideline central
bank of Nigeria usually demands a minimum lending to earn sector but the
merchant bank loan are mainly to the manufacturing sectors but they cant expand
loans to these sectors because of CBN restrictive guideline before loans are
given under the corporate impartment the purpose of the loan has to be stated,
financial information has to use produced one of collateral is adequate export
will be made to increase collateral
offered by borrowers.
Domestic bank lending, more especially include the commercial bank
merchant banks and development banks. As regards commercial bank it was
observed that their prospective borrowers must have large amount of money in
his/ her account before he could borrow money from them. And all these
contributed a lot towards the problems facing domestic bank lending.
1.1
STATEMENT OF PROBLEM
The period we witnessed in decline in the terms of
economic activity in Nigeria due to the oil glut, this period witnessed
declining oil revenue, choosing down of factories a show down on investment
security of raw material and retrenchment. During this period, the government
were involved in a lot of measures to revamp the economy and most of its policies
where implemented through the domestic bank. From the economic activity decline
overall, the level of domestic out put, which improved slightly in 1979,
stagnated in their was a decrease in the money supply but bank credit increased
that their by 1.408.3 million at 16. 6% increase compared with 1989.
In 1990,
development was unsatisfactory, industrial production fill petrol production
fill sharply due to the glut, but agriculture witnessed as improved by 3.4%
credit by banks during this period increased by 50.8% to 10, 2685.5 million,
the factor being credit expansion to the government. In 1992, there was a
continuous decline in production compared to 1991 increase were minimal bank
credit rose from 34.7% to 21.899.7 million, this was borne mainly by commercial
banks whose loans and advance to the private sector increased to 10, 453.5
million
In 1993, economy
was in severe mess. Agriculture decline because of natural disasters, this
affected mainly all subsections industry plummeted pectoris closed down, crude
oil out put went further down construction fill, but bank credit increased by
50% to 5.5million. In 1994, there was no significant change from the 1993
figures; the continuous decline was still there and government measures. Were
basically the same? In 1995, the economy went into a depression but there was
increased in GDP, which rose by 2.4% in contrast with 93/94 decline where there
was a full in the increase of bank credit 4.9% compared with 10.5% lending was
low at the beginning but plucked up in July to 32.7 billion.
With the economy
talking its particular trend there. Came a cry for diversification of the
economy which is heartily dependent on oil, the only why this could be solved
was through loans by banks to the right sectors of the economy, the CBN and its
regulations through her bank policies saw the need for the scope and nature of
the bank policies for large urban banks, and changed considerably, social and
economic changes outside of banking also accurate during the period. This is
the goal and operational policies of this system and its related institutional
structure was questioned on the grounds of her computability with the solution
to a number of critical social and environmental problems. Especially in the
rural areas, because of these changes it becomes apparent that more than a
routine revision of the banks and to make their lending policy computably with
social and environmental program banking in the northern of the Nigeria
development machines, if the duly punctured the machines would eventually break
down. Other that acting as banker to other banks in from of monetary policy
circular now established us bankers generally orders subject to revered review
yearly some recent ones being the placement of
ceiling in the aggregate credit facilities that commercial bank can
grant to the their customers, the regulations of the percentage of the total
credit facilities to economy, interest churges
And commission by
banks and indignation lending, because of this, I believe there became a need
for a money of CBN policy guidelines to different banks as will as banks
internal lending policy and effects on the economy during the 1990< 95
period.
OBJECTIVES OF
THE STUDY
The objectives
of this paper are:
1. To
apprise domestic bank lending polices in Nigeria during 1990- 95 period
2. To
fined the effects of loans grunted during this period in the Nigeria
3. To
examine the lending policies of various banks such as commercial, merchant and
development banks and evaluate their effects on economy through some key
project.
4. To
look at major problems encountered by banks in loan recovery and the best ways
of avoiding them and also suggest recommendation for the improvement of the
bank lending.
1.3 SIGNIFICANT OF THE STUDY
This study will be of important
to the banking institution, which includes among other commercial banks,
development banks and merchant bank that will from this book now known how to
make possible amendments in their lending policy. The merchant banks will from this work learn
to adjust their lending policies that is shifting from embarking only on short
financing to at least medium term financing to enable their borrowers utilized
their loan adequately. With the help of this books banks will also be able to
identify these sectors of the economy that needs adequate of the financing more
than other sectors so that they will direct their loans towards their sectors.
This will in no small way help to improve the economy.
Furthermore, so the central bank of Nigeria this will be use to them
because they will have to adjust their already stipulated credit guideline
which they have made for these banks so that these banks will be in the
position of making loan available to the proper sectors of the economy without violation of the central banks credit
guidelines.
DEFINITION
TERMS
1. CBN-
central bank of Nigeria
2. CCB-
co- operative and commerce bank
3. NIDB-
Nigeria industrial development bank
4. IMB-
international merchant bank
5. SFEM-
second tier exchange market
6. Banks
– commercial merchant and development banks
7. GDP-
gross domestic product.
LIMITATION OF
STUD
This research work has not been easy at all. Many
obstacles were met in the course of the research. The main problem among them
was time constraints. This is mainly because the research project has to be
complete at the time course work. The research was carried out during lectures
in the course work. Another major obstacle was finance.
CHAPTER ONE
TERMS OF REFERENCE
1. ADE
Ayooln “Redefine small scale industries business concord, December 1986 page 27
2. Central
bank of Nigeria annual report 1983.page 61.
3. Central
bank of Nigeria annual report, 1984 page 85
4. Nwankwo
G.O. “ the Nigeria financial system†honig Rony: the mulmilliun press limited
1982. Page 92
5. Uzougu,
W.O. money and banking in Nigeria Enugu fourth dimension publishing company
limited 1981. Page 102
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