BANK LOAN AND CREDIT COLLECTION IN NIGERIA
Chapter two deals with the overview, of bank lending, the types of loan available, criteria for bank loan and importance of bank loans to different sectors of Nigeria economy.
Finally, the conclusion on the research and recommendation made by the researcher and all in chapter three.
1.1 Statement of problem
2.0 Overview of bank lending
2.1 Types of available
2.2 Security for bank loans in Nigeria
Importance of bank loan to different
3.0 Summary, conclusion
In Nigeria today, there are good number of banks that fall under defined categories of functions. Some one branded commercial bank which is defined by Nigeria Banking Act 1909 as any organization which carries on banking business” followed by the amendment Act of 1970 which further defined banking business as, The process of receiving monies from outside sources as deposit irrespective of the payment of interest and granting of over – deft and loans and acceptance of credit or the purchase and sale of securities for accounts of others “while others are known as development mortgages merchant and co-operative bank.
In whatever identities, these financial institution are known, they are all principally established to promote the economi development and social potential well being of the location environment, the state and entire country.
Thus the most important phase in banking especially as it applied to obtaining bank loans in Nigeria banking industry to obtaining bank loans in Nigeria banking industry is in connection with the conversion of capital funds provided by the stock holder and funds deposited with the bank in checking and saving account by customers into earning assets like loan and advances. This is important because the interest income produces from the sound investment and effective income management of such fund as loans enables the bank to:
1. Pay for the cost of investing such fund
2. Provides services for customers and others
3. Pay rent in the form of interest to time depositors for use of their funds.
4. Reward the stock holders through payments of divided for the risk involved in investing their funds.
Thus, bank credit or loans in the borrowing or lending of a sum of money at an agreed rate of interest usually a specific period of time by a bank. Individuals and institution alike can obtain credit from banks which can be withdraw in cash or used in payment of bills. When a customers procure credit from his bank his assets loan financially or otherwise increases. A bank offers credit or loan purely on request by customers.
* Credit collection deals with the repayment of such loan granted to the customers by the bank. Sometime we find that there are a lot of problems facing them. But it is worthy to note that the actual work in connection with the management of this bank loan or credit is performed by and through the loans or credit is departments of bank in strict compliance with the programmes and policies established by the board of directors of the banks and annual credit policy guide lines of the central bank of Nigeria (CBN).
In other words, the effectiveness of loans and credit department of bank could be evaluated in its ability to make bank loans available to customers and payable on demand.
As such loans and credit function are the life blood of business and development factors are responsible for our standard of living and also the lubricant which keeps the wheel of commerce turnings.
Obtaining bank loans in Nigeria banking industry is never so easy task in the sense that a balance must be struck by the banks between profitability, liquidity and solvency. It is for this onerous tasks that there are established policies and administrative frame work guiding the granting of loans.
1. Problem of supervisory and regulatory authority (CBN) Evidences abound of where banks had either flouted their policies or that the supervisory or regulatory authority. Such negotiation may have risen from failure on the party of “loans” officers to perfect their securities.
2. Absence of investment risk criteria i.e. inability of the organization or individual to offer acceptable colletral.
3. The problem of not following up to loans after disbursement to ensure a proper use of such loans because some use it for their own selfish reasons.
4. Not knowing the credit worthiness of the organization or individual before granting loans to them.
5. The problem where some people default in repayment of the loan and are regarded as bad debt which affect bank negatively or make them distressed.
Bank loan and credit collection should be conducted in Nigeria as follows:
i. To identify the problem associated with obtaining bank loans and credit collection in Nigeria Banking industry
ii. The extent banks compliance with the annual credit policy guidelines of the Central Bank of Nigeria (CBN).
iii. To identify how bank loan and credit collection contribute to distress bank in Nigeria.
iv. To discover the reasons why loans are not granted to credit collection in Nigeria banking industry.
The extent of the Nigeria bank loans and credit collection and the problems associated with it contribute to the already existing works of the problem encountered in bank credit collection in Nigeria of will be of immeasurable benefit to the lending institution (bank). The borrower (individuals or organization) and the Nation.
Banks should be able to know and ascertain the credit need of the people the period of loans and rate of defaults on loans. They will also know certain problem and solution.
Will help the borrower to know the type of loan advance available and also enlighten them on the credit facilities available and the consequences.
To the economy of large this work will be of good help since loan advances has in the recent past being a national problem that needs urgent attention. It will help the federal and state government in the formulation of fined credit and loan advances policies for the country.
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