PROBLEMS OF OBTAINING BANK LOANS IN NIGERIAN BANKS

CHAPTER ONE

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.

CHAPTER TWO

2.0            REVIEW OF RELATED LITERATURE

In the process of this study, the writer discovers that inspite the roles of auditing in a developing economy and the economic development of any nation, those roles suffered serious neglect.  It is however, a thought provoking attempt to research into there roles in order to create awareness in the study of auditing wish particular emphasis on its roles.  It is also hoped that other people will line up in the continued effort to emphasize on the study and importance of these roles.

With regards to the coverage of this study therefore, the research intends to review related literatures with a view to highlighting and giving insight into the meaning of a developing economy, the historical background of auditing a slap distinction between accounting roles in Nigeria, technique of auditing and other relevant areas with their professional and legal environment as it affects Nigeria.

2.1     DEVELOPING ECONOMY – A DEFINITION

          often times definitions appear to be subjective despite their intention of achieving objectivity.  A basic tool for combating the problem associated wish any concept is an objective definition of that concept.  The definition of a developing economy can possibly be approached through many ways using different sets of criteria.  For instance, such factor as political economic, religious and cultural status which social scientists collectively refers to as ”resistance” give  one method of approach often used in defining a developing economy.

          It would then appear that a more appropriate definition of a developing economy to mean “Acountry which cannot provide itself directly or indirectly with a greater part of the fixed assets required to achieve a satisfactory level of socio-economic development.  Directly because it lacks the technological capability for the production of the relevant fixed assets or “indirectly” because its external trade capability is so weak that the importation of fixed assets such as tools making and raw material which are necessary for local production of those goods it has hither to imposed cannot be guaranteed over a long period of time.

2.2            THE HISTORICAL BACKGROUND OF AUDITING

The origin of auditing in a primitive form can be traced to the ancient time.  A famous biblical examples of properly appoint managers (seventh) to look after their (owners) property and expect to know what has happened to the property could be seen in St. Mathew’s Gospel Chapter 5 when a rich man going a journey entrusted his property to his servants and went away.  On his return, he called on them to settle accounts wish him on the property he entrusted to them while he was away.  He was not pleased with the servant who did not profitably utilize the property given to him.

Auditing in this context is regarded as one of the other, their roles can be emphasized thus:

  THE STATUTORY OR EXTERNAL AUDIT

This is an audit laid down by law distinctly and cannot be modified by any organisation.  The external auditor is independent of the enterprise and usually having statutory responsibilities to report on the financial statements thereby giving an account of the management stewardship.  He maintains an