A Bank economic purpose is to act as a financial intermediate it facilities the process of channeling savings into investments and one of the avenue of realizing this objective is by lending effectively.

It was recommended amongst others that state owned commercial banks should be effectiveness Banks should use the services of external consultants to manager collect the debts on account classified as doubt fill and prevent the diversion of funds by some borrower, the banks should try as much as possible to deal directly with contractors or supplies of the borrowers as the case may be.

All business regrettably experience bad debts, but bankers whose stock in trade is money view debt incidence with dread. Never the less, the occurrence of bad and doubt fill debts can be regarded as a difficult occupational associated with business. But for bank, it has for long been contended that, this dreaded and unavoidable disaster which should be kept with in reasonably margin of the total lending portfolio of the bank.

1.2 STATEMENT OF THE PROBLEM.

African continental bank was closed down by central bank of Nigeria because of the incidence of bad debts resultant from inefficiency of the bank workers and dishonesty.

Due to this high incidence of bad debt which the banks are experiencing from their customers the central bank of Nigeria set up the recapitalization of #25m to meet up with their customers incase any of the bank liquidate in order to settle or compensate those customers involved. And this is why Banks are merging themselves in order to meet the demand of the central bank of Nigeria

This unfortunate fund in the Nigeria banking industries had debt creditors of the bank loose their more and their dividends as bad debts.

Conflate between boards and management banks or among members of the boards and management. This caused dissipation of bank resources and the entrenchment of harmful operating practices.

Africans continental bank was also closed down due to doubt fill debts which gave rise to fraud and other unethical practices represent the most dominate factor responsible for its distress. It can often traced to the very high incidence of bad debts and loan losses. This could be called fraud and unprofessional conduct.

Weak internal control most operational problems are by and large symptomatic of poor quality management. The qualify of management often make the difference between success and failure in banking as in most often frauds of economic endeavour.

Decade ago to the fact that all the net profit generated has been sunk into yawning gap of bad and doubt fill debt.

1.3 OBJECTIVES OF THE STUDY.

Bad debt problem has become a vital problem which the banking industry are facing because they are generally known for creating of credit loans and advantages to customers and this is one of the duties or the motive of banking.

The minimization of high incidence of bad debt being the main aim and objectives of this work the objective for this study can then not be over emphasized if the effects of the debts on the bakery on the customer and on the society in general is appreciated.

However the study will among other things find the causes of bad debts by finding out whether the under listed factors about the incidence of bad debt and this factors include the following:

* Non – adherence of canons of good lending.

· Inadequate analysis

· Lack of supervision of loans.

· Dishonesty of some bank officials.

· Lending on political ground

· Low managerial skill

· Diversion of loan

· Inflation

· Recession.

The relevance of this study is under score in its desire to asset bank confirm the multifarious causes of bad debts in their operation and help alert and knows his customers project proposal and account operation thoroughly the unbendable nature of his proposed or the flagging position of his account could be easily spotted.