Evaluation Of Bank Lending Practices And Credit Management In Nigeria
[A CASE STUDY OF FIRST BANK]

1.5 SCOPE OF STUDY 

The research work limit itself to one case-study i.e FIRST BANK PLC. The investigation was conducted at Branch level and annual reports material made available to the researcher.

The research focused on lending process before and after disbursement up till final repayments with emphasis on effects, causes and remedies of Bad Debt.

The assumption of this research include the following

(i) That all Commercial Bank grant facilities to worthy clients with high expectation of 100% repayments of principal plus interests 

(ii) That all Commercial Banks in Nigeria are governed by same operational guidelines offered and professional conduct as issued by Central Bank of Nigeria in addition to their internal policies 

The study is limited to facility with repayment tenor of between 1 – 5 years duration.

1.6 DEFINITION OF TERMS 

In order to have a common knowledge and understanding between Research work and the meaning transmitted to its targeted beneficiaries, it beholds that a clear and unambiguous definition of words often used in the study be given. Although the words may have numerous meanings, the one given herein should be regarded as those referred to their usage in this research work.

Some of the “words” are defined as follows.

i) LENDING: A process by which a Bank customer is founds for specified purpose and specified period of time with a promise to repay the amount borrowed and applicable interest. 

ii) CREDIT: This involves giving (receiving) goods or purchasing power now in return for a promise to receive or re-pay the goods or purchasing power later. It is the sale of goods, services or money claims in the present in exchange for promise to pay (usually money) in the future. It includes a power to to repay both principal and interest instalmentally or in lump – sum in the future. BAD AND DOUBTFUL DEBT. This may be defined as a loan or debt, which has become irrecoverable at date of maturity. A loan may be termed bad or doubtful on event of borrowers failure to repay the loans in accordance with terms and conditions of the agreement. 

iii) ANTICIPATORY DEFAULT: On the other hand recognizes the happening of certain events which are ipso factor conclusive evidence of default whether or not the loan or the interest has fallen due” 

(Banking digest and Finance Vol. 5). 

iv) FINANCIAL INTERMEDIATION: This is defined as financial transactions, which bring savings surplus units together with savings deficit units so that savings can be redistributed into their most productive uses. 

v) SECURITIES: This may be defined as something that provides safety, freedom, from danger or anxiety, something valuable for example a life insurance policy given as pledge for the repayment of a loan or fulfillment of a promise or undertaking.

vi) COLLATERAL SECURITY: This is any security deposited by a third party to secure the indebtedness of the customer with the advantage that in the event of bankeupty or liquidation of the borrower, the value of such securities may be ignored in the proof of dividend against the fail estate.