EMPIRICAL ANALYSIS OF COMMERCIAL BANKS LENDING POLICIES TO THE PRIVATE SECTOR (A CASE STUDY OF UNION BANK OF NIGERIAN PLC)

CHAPTER ONE

1.0            INTRODUCTION

1.1     BACKGROUND OF STUDY 

Over the years the Central Bank of Nigeria had stipulated the amount of interest and lending rates that are obtainable in our commercial banks, with a view to harmonize these rates in all commercial banks in all the country it will be of interest to note that the central banks credit policy guideline had been a reflection of the country’s economy form year to year.

The monetary and credit policy measures were designed to accelerate the rate of domestic production maintain healthy balance of payment position reduce the arte of domestic price inflation.  Monetary policy measures were also aimed at increasing the flow of credit to the priority sectors of the economy particularly the agricultural and manufacturing sectors so as to expand the production of home made goods and services.  The stand of monetary policy continued to be tight to complement a disciplined fiscal policy in order to achieve moderation in inflection any measure and ensure exchange rate stability.

HISTORY OF BANKING IN NIGERIA    

The Nigerian banking ordinance of 1952 and the banking act of 1958 and various amendments and innovations through 1969 laid the foundation for the operation of commercial banking in Nigeria. The number of commercial banks operating in the country rose from eight (8) in 1959 to twenty five (25) in 1983.  as at 1995 there are 65 commercial banks in Nigeria with 1634 branches in urban areas 763 branches in rural area and 6 branches abroad totaling 2403 branches a significant increase. While bank branches and offices increased from 160 to 1108 branches and offices in these period. The total deposit liabilities also rose from 13.6 million Naira in December 1969 to 13.9 billion Naira at the end of 1983.   Since 1977 and following the enactment or promulgation of Nigeria Enterprises promotion decree 1972 it has become mandatory for all banking institutions in the country to be at sixty percent (60%) Nigeria owned.