ABSTRACT
Chapter one portals the problems
associated with the Nigeria
commercial banks why serves as the introduction of the problems associated with
loan recovery and it also gives the historical development of commercial banks
in Nigeria.
Chapter two, lays emphasis on the loan, origin and
deification and how loan playa vital role in loan lending for the economic
development and money creation in our society, both the lender and borrower
have a duty to per form, for an efficient and effective lending to be carried
out.
The conditions which the
commercial banks must undergo before granting out loans to customers was
emphasized in chapter. Three of these work. Despite the precautions taken by
the commercial banks they still encounter series of problems in loan recovery
from their customers. Among them are non-repayment of loan, unwillingness to
repay etc.
Loan, recovery problems have an
adverse effect on availability of funds, due to the customers unwillingness to
repay the being borrowed by them when due (i.e at maturity). These problems
have great effects on the commercial banks since one of their functions is
granting loan to customers. The effects of the non-repayment of loan by
customers will not be emphasized. Though there are some remedies/solution to
all these.
TABLE OF CONTENT
Title
page: = = = = i
Approval
page: = = = = ii
Dedication: = = = = iii
Acknowledgment: = = = iv
Abstract: = = = = v
Table
of contents: = = = vi
CHAPTER ONE
Introduction
CHAPTER TWO
Loan,
origin and definition
CHAPTER THREE
Problem
associated by Nigerian
Commercial
banks in loan recovery
CHAPTER FOUR
How
recovery of loan problems
Affect
credit availability
CHAPTER FIVE
Summary/recommendation
Reference
Bibliography
CHAPTER ONE
1.1 INTRODUCTION
In recent years, loan recovery
problems have been of the main problems that the Nigerian commercial banks has
had to face. Those problems have been main target of policy measures all these
years, though at a time it become main focus of policy on which was retarded as
more pressing and serious each time. Today the situation in Nigerian have
become very serious and seemingly intractable.
The problems of loan recovery in the
pigovain sense refers to a situation in which there is a major break down in
the repayment agreement resulting in an on due delay in recovery or collection
and in which it appears that legal action may be required to effect recovery
for in which there appears to be a potential loss. Such a loan there fore
requires special attention on the part of the lender if it is to be collected
in full within a reasonable period of time after maturity.
A truism in a commercial bank lending
situation is that unless the commercial bank accesses lending risk and devices
and effective way of lending against risk related to the borrowers, industry,
management or operation in the qualify of the loan portfolio might survive from
an increase in past due debt, non accruals and charged off loans. Thus, even if
the borrowers have not met the initial criteria for a desirable borrowing
customers through interview and credit investigations, the rest point of
emphasis in credit risk analysis is in the borrowers financial statement
(specially incase of business firm). The later assists the lender to determine
whether the firms operations will be able to generate sufficient cash flow to
repay debt and whether its asset will be available as collaterals of course the
degree of reliance on financial statement analysis is directly related to how
they are prepared. Therefore deductions about credit risk levels from the
analysis should necessarily be tempered with additional information from the
borrower.
Commercial Banks lending objectives is
to make loans that can be repaid. While minimizing her exposure to loans with
poor credit quality. However every lending institution finds itself from time
to time with loan for which the risk of loss is greater than anticipated, when
the loan was made or in which the risk is greater than a lender would
ordinarily willingly assume. This is because in the lending environment, there
are basically two types of borrowers, the good and bad. It is the category of
borrowers that carries a risk of default on loan repayment.
HISTORICAL DEVELOPMENT OF COMMERCIAL BANKS IN NIGERIA
Commercial bank is defined as an
institution that carries out the business of recoving money and collecting
drafts from customers subject to the obligation of honouring cheques drawn upon
them from time to time by the customers to the extent of the amount available
on their current account. Based on this definition, the commercial bank carries
out such functions as:
·
Acceptance
of deposit
·
Providing
loans and overdrafts
·
Drawing
of cheques
·
Transferring
of money
Commercial
banking in Nigeria
started in the 1892 with the establishment of the African Banking corporation
(ABC) through the instrumentality of Elder Dempster and co a shipping company
based on rive pool. Due to initial difficulties, the bank did not exist beyond
1893. in 1894 (BBNA) was incorporated in London
and opened a branch in Lagos
the same year C.N. Asuzu, Elements of banks with the establishment of
industrial an commercial bank. The establishment of this bank was promoted by
the nationalist dissatisfaction with the existing foreign banks who discrimed
against Nigerian in granting of loans. How ever, indigenous banking era had
some failures in the sense that most commercial banks established in that ere
collapsed due to the granted loan to Nigerian indiscriminately. The first
surviving indigenous bank survived because of the support they get form the
regional government (western government) another successful indigenous bank was
Agbomagbe established in 1945.
The third expartriate bank British and
French bank (currently) (UBA) was established in 1949, this joined the two
other expartriate banks to dominate the banking business in Nigeria, the
expartriate bank still neglect the indigenous entrepreneurs and concentrated in
international trade and dealing with government.
Since the inception of the first
banking legislation there had been other banking legislating, for instance the
banking legislation o 1952 that vested the power of control of banking on the
financial secretary. Others are the 1958
banking ordinance and subsequence amendment 1961, 1962,1964 and the
banking act of 1990.
According to Mr. C.N Asuzu in his book
element of banking in Nigeria, the first bank emerged in Nigeria was British
bank of west African 1894 now first bank of Nigeria followed by Bardays bank
Dco 1917 now known as union of Nigeria etc.
1.2 STATEMENT
OF THE PROBLEMS
The problems of loan recovering not
only in commercial bank but all the banks as a whole is unable to pay back loan
as at when due.
It is true that before a loan is been
given to a customer especially customer of a bank collateral is suppose to be
present but some time the collateral presented may or may not be able to pay
back the loan that is been collected from the banks
Again is over trusted some managers,
due to because the customer always due to because the customer always put or
deposit a very amount of money in their bank amy ro may not came to ask them
for collateral and at last the whole money will be lost.
1.3 OBJECTIVES
OF THE STUDY
The objectives is to find out the
remote cause of the problem which is given out loan and feeling less concern
that is not be kan
about collateral
1.4 SIGNIFICANCE
The significance is that before any
customer should be given loan he or she should be ask to present collateral and
the collateral is not suppose to be cumbersome. Whether person is your child,
wife or mother collateral should be presented.
1.5 SCOPE
AND LIMITATIONS OF THE STUDY
With the review form what that have
been noted far, it is clearly explain that this study will focus on the
problems of loan recovering in commercial banks and how they are going to be
solved.
1.6 DEFINITION
OF TERMS
BANKS: These
means an institution where people or business can keep their money. Banks also
offers services such as lending exchanging or transferring money, they also
grant overdraft to their customers
CUSTOMERS: An
individual or household that purchases a particular produces for personal or
household or industrial use.
COLLATERAL: These refers to money or property which is used a
guarantee that some will repay a loan.
REFERENCE
1.
C.C.N
Asuzu (1995)
Elements of Banking in
Nigeria 1st Edition then
Onwuka and sons publication. P 60-75.
2.
B.C
Okeke (1996) Banking
operations in Nigeria.
1st Edition. Beset
printing Ekwulobia p. 136.
3.
DR
JOHN ORJIH (1996) Element
of banking 1st
Edition p 12.
4.
DR
JOHN ORJIH (1996) Banking
operation
5.
J.L
HANSON (1975) A
dictionary of commerce
and economics with edition Winchester publication
p.117.
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