PROPOSAL
Granting of credit is
risky and which has to be revise as the most important risk which Nigeria banks
face, Therefore, is the risk which could cause a loss for a bank due default by
customers in meeting their obligation.
In order to organize
this, credit management involves credit analysis to assess and safeguard
against the risk involves in the extension of credit, to bankers customers.
This lead to the topic credit management in Nigeria commercial bank; this
research work will contain chapters from one to five, in chapter at this
project, the aim will be the introduction part of credit management in Nigeria
commercial banks. It will state objective and significance at the study, it
will also contain the statement of the problems which state as that.
Credit must be
adequately managed so that banks could be remain business and it could be done
through prudent lending. It will state how loan in commercial bank cannot be
granted to customers. The statement will show that no matter how prudent a bank
is, in its lending, they must make provision for bad and doubtful debts.
The scope and limitation
of study and the test of hypothesis will also be review of related literature,
under chapter two will define bank credits which will includes over draft,
loan, and letter of credit. This chapter will state why bank should give
credit, sources of repayment and characters of borrowers because characters of
customers should be thoroughly change and investigated before granting only
credit to such customer.
In chapter three it will
show how research design and methodology will be collected, because the
research for this project will base on primary source data collection and
secondary source of data. Primary source of data include data which will obtain
direct oral interview with some loans and advanced management/offers and some
strategic management staff in commercial bank; secondary source will consist
information from banks annual statement, Journals, news papers and other text
books from libraries. Chapter four will show how data collected will be
presented and analyze and chapter five will be summary and conclusion with
bibliography.
TABLE OF
CONTENT
Introduction
1.1
Background of
study
1.2
Statement of the
problem
1.3
Purpose/objective of the
study
1.4
Research questions
1.5
Research
hypothesis
1.6
Significance of the
study
1.7
Scope, limitations and
delimitations
1.8
Definitions of
terms
Reference
Chapter Two
Review of related
literature
2.1
Definition of bank credit
2.2
Reference
Chapter Three
Research design and
methodology
3.1
research design
3.2
area of
study
3.3
Population
3.4
sample and sampling
techniques
3.5
instruments of data
collection
3.6
method of data presentation
3.7
methods of data
analysis
Reference
Chapter four
Data presentation and
analysis
4.1
data analysis and test of hypothesis
Reference
Chapter five
Findings, recommendation
and conclusion
5.1
Findings
5.2
Recommendation
5.3
Conclusion
Bibliography
CHAPTER ONE
INTRODUCTION
1.9
BACKGROUND OF STUDY
The banking industry has been known for its
intermediary role in providing financial assistance (credit) needed in the
economy. this role of financial intermediation is carried out in so many ways.
First to be mentioned is the granting of loans and advances to customers which
constitutes the major part of banking lending. Apart from loans and advances,
other forms of bank credits like bond issued banks for and on behalf of their
customers.
In providing credits or for business venture,
banks should as a matter at important take all necessary steps to ensure that
advances are granted to those customers who can and will make judicious use at
loans so that repayment will not become a problem. Therefore credit must be
made to people who are capable for utilizing it well and repaying back the loan
at its maturity data. Affairs at banks can be explained by reference to the
fact that “loan and advances are the large single item in the asset structure
of Nigeria commercial banks; it also constitutes the major source at the
operating income at banks and also the most profitable asses for the employment
of bank funds.
According to Olashore, “credit (Loan and
advances) are important to the bank balance, they account for a large
proportion at banks income; such operating income produced from sound
investment and effective management of such funds in credits enables the bank
to:
(i)
Pay depositors interest
(ii)
Pay investors dividend
(iii)
Pay government tax
(iv)
Have further investment and
(v)
Maintain adequate reserves.
The actual work in connection with the
management and conversion of such funds into various types of credit facilities
in an operating function is performed by the credit department of commercial
bank instruct compliance by the “Board of Director” at the bank, lie annual
credit policy guidelines and prudential guideline (1990) of the Central Bank of
Nigeria (CBN) and other monetary and fiscal policy issued by the government of
Nigeria. The credit department is usually headed by a loan officer manager who has
acquired a high skill experience and personal judgement criteria in credit
administration.
Medium - term loans and
long-term loan including overdraft facilities.
1.10
STATEMENT OF THE PROBLEM:-
The only way to avoid bad debt is to refuse to
lend money at all. But if banks should refuse to lend money at all issue at
profitability is called hence the main purpose of carrying on business which is
to maximize profit will be defeated. Credit must be adequately managed so that
banks could remain in business and this could be done through prudent lending.
However, irrespective of how prudent a bank may
be in its lending, the fact remain that every year, provision for bad and
doubtful debts should be provided for. Not all loan should be granted. A profitable
loan which is not safe should not be granted. The attitude of most borrowers to
wards loans and advances granted to them should not be ignored. As they regard
such credit facilities as their own share at the national cake.
Furthermore, failure at banks to make use of
banks to make use of trained qualified and experienced personnel in their
credit management is a problem that should be addressed.
Bank are merely customers of the money that
depositors deposit with them, and hence interest must be paid to depositors and
dividend to the investors. Credit management can be seen as an integral part of
lending and as such in its absence, good loans can turn into bad one. It is
expedient to note that the important of credit management cannot be over
emphasized and good credit management required the establishment of Adherence
to and of sound and efficient credit policies of government.
For banks to be successful their corporate
credit policies must be sound procedures for monitoring and repayment, must be
ensured adequately for credit appraisal disbursement. But experiences over the
year has shown that inadequate credit analysis and sound judgement of loans
application has resulted to outperforming loans. Provision of credits which are
in the form of loans and advances are the total amount of money a given bank
lends out to its customers at any given period of time. The bank usually charge
the borrower interest for bank using its money. These loans and advances
usually have maturity period.
Such credit facilities provided by banks are
usually in the form of short term facilities.
THE OVERALL RESULTS OF THE ABOVE ARE:
(i)
It exposes the bank to various problems of debt recovery.
(ii)
Consequently expenses are incurred in form of provision made.
1.11
PURPOSE/OBJECTIVE OF THE STUDY
1.
To investigate on the bad and doubtful debts in Nigeria Commercial Banks?
2.
To examine the effects of bad and doubtful debt in Nigeria Commercial Banks
Profitability.
3.
To assess the incidence of bad debt on the banking industry and the economy in
general.
4.
To identify the possible measure of preventing the occurrence of bad debt in
the Nigeria Commercial Banks.
1.12
RESEARCH QUESTIONS
(1)
Does in appropriate loan supervision cause bad doubtful debts.
(2)
What are the effects of bad and doubtful debt on your banks profitability?
(3)
At what rate is the incidence of bad debt on the banking industry and the
economy in general?
(4)
What are the likely possible measures of preventing bad debt?
1.13
RESEARCH HYPOTHESIS
(1)
Ho: Inappropriate loan supervision and monitoring
is not the najo
cause of bad debt.
Hi: Inappropriate loan supervision and
monitoring is the major
cause of bad debt.
Ho: Bad debt does not adversely affects the
profitability of a bank.
Hi: Bad debt adversely affects the
profitability of a bank.
Ho: The incidence of bad debt on the banking
industry and the
economy in general is not high.
Hi: The
incident of bad debt on the banking industry and the economy in general is
high.
1.6 SIGNIFICANCE
OF THE STUDY
The significance of this study is to make
contribution on the going study of problem loans in the Nigerian commercial
Banks. The study will also add to our understanding of how Nigerian commercial
banks grant their credits.
This work is also relevant in educating the readers on the basic and
conflicting rudiments of Nigeria commercial Banks Credit operations and the
causes of bad and doubtful debts, stating also those who stands to benefit from
the study and how.
The Beneficiaries of
this study are:
(i)
The practicing bankers.
(ii)
The credit and loan officers,
(iii)
The bank directors/managers
(iv)
The investors etc.
Moreover, this study could be of immense help to
students of banking and finance to equip them when they go into the field of
the course they read.
1.8 DEFINITIONS
OF TERMS:-
(a) CREDIT: This
is financial assistance in form of loans and advances granted by banks to their
customers.
(b) LOANS: A
borrowed sums of money at an agreed rate at interest, usually for a specified
period of time and repayable in line with the terms of the loan agreement.
(c) C.B.N: Central
Bank of Nigeria; This is the apex regulatory authority of the financial system.
(d) CREDIT
GUIDELINE: An annual monitoring circular (guiding Principle for
Commercial and Merchant Banks lending published by the C.B.N.
(e) CREDIT
POLICY: This rules and regulations guiding banks in their lending.
(f) BAD
AND DOUBTFUL DEBTS: This offers to all the non-performing credit
facilities to reflect such specification in the C.B.N prudential guidelines.
(g) OVER
- DRAFT: This is a less formal credit facility by which a current
account customer is allowed by a bank to write cheques in excess of the
existing balance in his/her account.
Department | Banking and Finance |
Project ID Code | BFN0269 |
Chapters | 5 Chapters |
No of Pages | 28 pages |
Methodology | Chi Square |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
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Contact Us On | +2349067372103 |
Contact Us On | +2349094562208 |
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