PROBLEMS OF OBTAINING BANK LOANS IN NIGERIAN BANKS

1.0            INTRODUCTION

1.1     BACKGROUND OF THE STUDY:

Erasing enterprises is established with the assumption that the objective of every management is to maximize profit.  And a very good example of the sector is the financial institution known as the banking sector.  The phenomenal growth of banks following the introduction of SAP creates a fake impression that the banking sector is an all corners business.

The banking and financial industry if unique in that it depends mostly on the public confidence and once the confidence is eroded on some banks, it may spread to other banks and institutions and this could be very dangerous to the whole system and the economy at large.

It should also be noted as (Orji 1998) stressed that bank lending simply means credit creation and that implies that the profit maximization of the banks is mainly realized through credit creation, the bank authorities should abide by the rules and regulation of APEX Bank (CBN) i.e. lending to the worst unit sector of the economy and on a reliable collaterals.

The research work will focus on the possible reasons for bank failures.  In this regard of loan lending and loan recovery and effect of such on the rest of the populace plus how the financial industry could be transformed to meet the increasing challenges of the present day and finally assessing the role of the Central Bank of Nigeria in ensuring safety of bank loan.

1.2            OBJECTIVE OF THE STUDY:

The issue of bank lending and its recovery strategies passed as a challenge to the financial sector in particular and the whole economy in general and as such the project work is carried out to meet the following aims and objectives.

1. To know if the increased administrative expenses can be eliminated by good lending policies.
2. To find out if default borrowers can be reprimated by serving a demand notice.
3. To ascertain how secured the collateral securities of these loan are.
4. To find out the extent of defaultness in the repayment of loan advances.
5. To establish the factors responsible for loan repayment in Nigeria.

1.3            SIGNIFICANCE OF THE STUDY

The research study will bring to light the observed reasons for commercial bank credit recovery failure and the effect of such on the institution, this will help banks to make amendment where necessary and help them increase their creation abilities and recover them at the fullness of time.

1.4            SCOPE AND LIMITATIONS OF STUDY:

This research work focuses on the commercial bank lending and loan recovery strategies due to problem associated in the regards in the sector.

The study will reflect briefly on the history of banking business in Nigeria, the development over the policies on operations and mode of xx.

However, due to limitation the work now focused on the Citizens International Bank, currently, there has not been enough work on the loan recovery strategy in the industry. It is expected that the move will be affected by those factors.

This financial constraints has adversely affected this study.  Also proximity to published book on the said project topic as a difficult task to overcome.

Moreso, the data obtained is with the scope of the domestic banking as financial system, the issue of time constrains the project works.

Since this work needed extensive research to come out a very constructive project and while it was done simultaneously with other class work it has not been easy to allocate enough time to this study.

The work though very interesting was constrained by certain factors.  It would have been wonderful if author was opportune to have all the resources needed at his disposal, but this was not possible due to time factors and financial constraint on the other hand and financial problems coupled with general like in faces as occasioned by the fuel crisis that prevailed over the period of the study automatically limited my visitation to places where I would have sourced information.

1.5            DEFINITION OF TERMS:

The following are some technical terms used in the project.

1.       CREDIT POLICY:

This is how a firm plans to give its credit collection of debts owned to it by its customers.

2.       LOAN PORTFOLIO:

A mixture of shares and bonds held by a firm.

3.       CAPITAL:

          It is the money by which one start off a business with. In a more technical terms, it could be referred to as the resultant between total assets and the habitation of a firm.

4.       MANAGEMENT:

The dismantling of regulation by Central around the world.  This has been another features of xxx internationalization.

5.       CAMEL:

Capital adequacy, asset quality management competence, burning strengths and inquisitively sufficiency.

6.       NIGER EUGENE:

(1999) defines manager as the fusing together to two or more companies to form a company whether fusion it voluntary of forced.

7.       SAP:

          Structural Adjustment Programme.

8.       APEX BANK:

          This is the regulatory authorities of banking in Nigeria and if otherwise known as Central Bank of Nigeria.