TABLE OF CONTENT
CHAPTER ONE
Introduction
1.1
Background of the study
1.2
Statement of the problem
1.3
Purpose/Objective of the study
1.4
Significance of the study
1.5
Limitation of the study
1.6
Definition of terms
CHAPTER TWO
2.1
Review of related literature
CHAPTER THREE
Research design and
methodology
3.1
Source of data (secondary source only)
CHAPTER FOUR
4.1
Finding
CHAPTER FIVE
5.1
Recommendation and Conclusions
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
The history of banking
and lending dates back to the barter period and the period when sold Smiths
were used as acceptors of deposits from the public. Banking developed out of
the Gold Smiths who developed the practice of storing people’s gold and valuables
for safe keeping. At first, such establishments were simply like were house.
Depositors left gold for
safekeeping and were given receipts, which they would present, to the gold
Smiths for their gold or valuables after paying a little charge to the goldsmiths.
At apt, the goldsmiths discovered that not all to depositors of gold come at
the same time to collect them, the goldsmiths started to issue receipts, which
evidenced indebtedness, and was transferable out of the gold deposited. The
goldsmiths started to lend out these services this marked the origin of lending
in the history of banking.
The major difference
between the goldsmiths system of banking and today system of banking is that it
is not the particular depositor’s money that is given him back when he calls
for it but the value of what he deposited whether his own or others in our
economy today. There is much development in the system of banking compared with
that obtained during the time of goldsmiths.
Today we operate
different types of banking: development, merchant and commercial banking with
extensive duties and responsibilities. However, in the discourse, we should
focus mainly on commercial banking as demanded by the topic.
Commercial banking
activities started in Nigeria in 1892 with the establishment of African Banking
Corporation. The first bank of Nigeria than the bank of British West Africa was
set up in 1894 followed by the Barclays bank in 1917. the banks were set up to
provide banking services f ort he colonial administration and British
commercial interests.
Then in 1933, the
national bank of Nigeria came in to score prior to 1959, when the central bank
of Nigeria (CBN) in 1959 added a new chapter in the evolution of commercial
banking in Nigeria. The 1969 banking decree fully established commercial
banking in the country by requiring all the banks to be fully incorporated.
Industrial and
commercial banks and the Nigerian merchantable bank established prior to that
time had collapsed the objective of the government was partly to discourage
monopoly of monetary transaction by the two established expatriate bank and to
liberalize credit facilities for Nigerian, Nigerian enterprises. This is the
area that really interest. Thus banks have been called upon to be liberal in
their credit policy.
Nigeria commercial banks
while applying their funds mainly in loans and advances encounter problems in
credit advances. It is in most cases the rule rather than exception that money
advanced to most indigenous customers is often regarded as “our money or my own
share of the Ori Boom” while is meant not to be repaid. In the book of most of
our indigenous commercial banks. There is a backlog of bad debts. It is any
wonder also that while the greatest security for an advance is the personal
integrity of the customer, our environmental constraints have made us to make
rather indigenous contribution to the world’s banking practice by our
insistence on valuable security as a necessary condition f or an advance.
The lending policy of
these banks showed that loans were granted to those close to the corridors of
lowers without adequate. Securities, the average Nigerian has always
complained grumbled abut his inability to obtain.
Financial assistance by
way of credit facility from his bank the customer also complained of how the
very strigent conditions for obtaining loans and overdrafts have crystallized
the burdens on this way to secure bank credit; he has always believed that only
highly placed and influential customers can obtained loans and advances with little
or no form of security. This resulted in set backs in the growth and
development of these banks so that more funds were being injected to neutralize
the situation or restructuring and streamlining the boards of management which
led to the existence of state owned banks like the bank of the North, new
Nigerian Bank, progress bank etc.
One factor was dominant
in the development of the early indigenous banks. This was that they were al
founded to assist indigenous businessmen. To certain extents, banking facilities
came readily to the door step of Nigerians. In spite of the problems involved,
most state governments still see the establishment of the state banks as the
panacea for the economic survival od their respective states more state banks
have been established in recent years in collaboration with private sector
partners as a means of improving the revenues base of the respective state
government, and consequently as a means of stimulating the economic development
of the state in particular.
It also extended its
participating interest in business, enter in to the banking sector following
the promulgation of the indigenization decree of 197 and 1977 by acquiring a
60% interest in all the established expatriate commercial banks. As a result of
this, all the commercial banks are now indigenous these commercial bank render
a lot of services to customers. These services include lending and it is the
problems these banks encounter in rendering this service that the want to
discuss.
Effective protection of
depositors involves not only stringent measures to ensure unpredictable bank
losses. Many instruments were therefore used for this and it is these
instruments that pose problems to commercial banks, lending. These instruments
will be discussed in later chapters of this book and the way they pose problems
to commercial bank lending elaborated on.
Commercial bank give how
types of credit to their customers namely overdrafts and loans but the
researchers are concentrating on loans even thought that overdraft increase is
discussed as well as the different types of loans. This issue is therefore a
reflection of a remarkable progress of the financial sector in attaining
proficiency and recognition its social and economic significance as well as
highlights of most of the problems which the success of the sector has brought
in its wake. The success and growth and profitability of all commercial banks
depends on the satisfactory services which customers receive and the confidence
they repose on them.
1.2 STATEMENT
OF THE PROBLEM
Lending is a very
important services rendered by commercial banks. The researchers shall
critically examine the credit risk that militate against bank lending in
Nigeria, we shall equally book in to the central bank of Nigeria (CBN) credit
guideline its directives on lending as regard sectarian allocation.
Besides, the securities
required of the customers as a constraint to bank lending will also be looked
at. Also, the effect of security or collateral provision on loan disbursement
and repayment will be looked at and dealt with.
In addition, we will
bring to book the effect of society and general economy on loan disbursement
and repayment by commercial banks and the possible solutions high lightened.
1.3 PURPOSE/OBJECTIVE
OF THE STUDY
The purpose of this
study is to examine critically the problems commercial banks encountered in
loan lending and repayment and how this loan disbursement has contributed to
economic most other business activities; lending is prone to two types of risks
generally called the dynamic and pure risks.
The study of commercial
banks loan disbursement problems and prospects is important especially at this
period of economic recession. Also bearing in mind that finance is the prime
mover of every venture, the study of ultimate source of this finance is very
essential. Besides the rational of this study can be justified now that Nigeria
is growing bank wise.
1.4 SIGNIFICANCE
OF THE STUDY
This project answers an
important question and it is upon this that research is based problems and
prospects of commercial banks. This work is of great importance which provides
such guidance to all in the business profession especially the financial, banks
and businessmen the recommendation given there on are of immense help to bank
management in correcting some of the problems inherent in the system so that in
more reliable and efficient banking system will be ensured.
As regards
organizational procedures, this work is therefore a reflection of the
remarkable progress of the financial sector in attaining proficiency and
recognition of its social economic significance.
Finally, the success,
growth and profitability of al commercial banks depend on the satisfactory
services, which customers receive, and the confidence they repose on them. The
reason is that the most important aspect of bank-customer relationship is the
confidential relationship. The issue of this confidence is the one that
disservices serious attention.
Department | Banking and Finance |
Project ID Code | BFN0166 |
Chapters | 5 Chapters |
No of Pages | 36 pages |
Methodology | Descriptive |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
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Contact Us On | +2349067372103 |
Contact Us On | +2349094562208 |
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