THE PROBLEMS ASSOCIATED WITH LOAN RECOVERY IN NIGERIA COMMERCIAL BANKS
Chapter one portals the problems associated with the Nigeria commercial banks why serves as the introduction of the problems associated with loan recovery and it also gives the historical development of commercial banks in Nigeria.
Chapter two, lays emphasis on the loan, origin and deification and how loan playa vital role in loan lending for the economic development and money creation in our society, both the lender and borrower have a duty to per form, for an efficient and effective lending to be carried out.
The conditions which the commercial banks must undergo before granting out loans to customers was emphasized in chapter. Three of these work. Despite the precautions taken by the commercial banks they still encounter series of problems in loan recovery from their customers. Among them are non-repayment of loan, unwillingness to repay etc.
Loan, recovery problems have an adverse effect on availability of funds, due to the customers unwillingness to repay the being borrowed by them when due (i.e at maturity). These problems have great effects on the commercial banks since one of their functions is granting loan to customers. The effects of the non-repayment of loan by customers will not be emphasized. Though there are some remedies/solution to all these.
TABLE OF CONTENT
Title page: = = = = i
Approval page:= = = = ii
Dedication: = = = = iii
Acknowledgment: = = = iv
Abstract: = = = = v
Table of contents: = = = vi
Loan, origin and definition
Problem associated by Nigerian
Commercial banks in loan recovery
How recovery of loan problems
Affect credit availability
In recent years, loan recovery problems have been of the main problems that the Nigerian commercial banks has had to face. Those problems have been main target of policy measures all these years, though at a time it become main focus of policy on which was retarded as more pressing and serious each time. Today the situation in Nigerian have become very serious and seemingly intractable.
The problems of loan recovery in the pigovain sense refers to a situation in which there is a major break down in the repayment agreement resulting in an on due delay in recovery or collection and in which it appears that legal action may be required to effect recovery for in which there appears to be a potential loss. Such a loan there fore requires special attention on the part of the lender if it is to be collected in full within a reasonable period of time after maturity.
A truism in a commercial bank lending situation is that unless the commercial bank accesses lending risk and devices and effective way of lending against risk related to the borrowers, industry, management or operation in the qualify of the loan portfolio might survive from an increase in past due debt, non accruals and charged off loans. Thus, even if the borrowers have not met the initial criteria for a desirable borrowing customers through interview and credit investigations, the rest point of emphasis in credit risk analysis is in the borrowers financial statement (specially incase of business firm). The later assists the lender to determine whether the firms operations will be able to generate sufficient cash flow to repay debt and whether its asset will be available as collaterals of course the degree of reliance on financial statement analysis is directly related to how they are prepared. Therefore deductions about credit risk levels from the analysis should necessarily be tempered with additional information from the borrower.
Commercial Banks lending objectives is to make loans that can be repaid. While minimizing her exposure to loans with poor credit quality. However every lending institution finds itself from time to time with loan for which the risk of loss is greater than anticipated, when the loan was made or in which the risk is greater than a lender would ordinarily willingly assume. This is because in the lending environment, there are basically two types of borrowers, the good and bad. It is the category of borrowers that carries a risk of default on loan repayment.
HISTORICAL DEVELOPMENT OF COMMERCIAL BANKS IN NIGERIA
Commercial bank is defined as an institution that carries out the business of recoving money and collecting drafts from customers subject to the obligation of honouring cheques drawn upon them from time to time by the customers to the extent of the amount available on their current account. Based on this definition, the commercial bank carries out such functions as:
· Acceptance of deposit
· Providing loans and overdrafts
· Drawing of cheques
· Transferring of money
Commercial banking in Nigeria started in the 1892 with the establishment of the African Banking corporation (ABC) through the instrumentality of Elder Dempster and co a