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Problem Of Credit Management In Nigeria Banking
[A CASE STUDY OF AFRIBANK PLC ILORIN BRANCH]
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Furthermore, the success or failure of an economy depends upon the proper and effective management of banks. The need to regulate the operations of the banking system, to whatever extent has historically been one of the prerogatives of any governmental system. Nigeria is no exception with the regulatory frame work provided by the Banking Decree of 1969 as amended and the Central Bank of Nigeria Act of 1958 as well as various circulars and objectives issued from time to time under the provisions of the Act.
Although the success of banks in Nigeria today is dependent upon the business environment or economic climate, it is move dependent upon the effect of the various regulatory constraints placed on them and the political and unsiable environment which they operate.
OBJECTIVES OF THE STUDY
The basic objective of the study is to examine problems of credit management culture of the banking institutions in Nigeria which entails analyzing how key and supporting ratio are used in determining bank credit worthiness and the significance of these ratios with emphasis on Afribank.
A critical examination of the principles and practice guiding the lending at financial institutions (commercial banks)with a particular reference to Afribank of Nigeria Plc with a view to identify credit administration and securities that are acceptable to Afribank.
Analyzing and the examining of credit management in commercial banks in Nigeria.
SCOPE OF THE STUDY
As previously outlined, bank credit analysis is an attempt to undercover the risk of the lender arising from creditor or potential credit related transactions, hence the general principle of bank lending will be examined.
A case study of a commercial bank will be examined. The chosen bank is Afribank of Nigeria plc. Afribank is chosen being one of four banks operating the Nigeria banking industry.
The current financial report of the bank will be analyzed to determine whether or not it is credit worthy on the basis of their performance during the period in question. The credit analysis ill be on the liability and profitability of the bank.
Hence fianancial ratios will be used as the device for measuring the profitability, asset quality, liquidity, capital adequacy and management of the bank.
RESEACH METHODOLOGY
The research study, which is historical explanatory and fact finding in nature, has necessitated a great need for data and information collection. Both primary and secondary source of data will be used (Primary includes oral discussion and personal interview with the bank officials) depending on the adequacy of the data collected.
PLAN OF THE STUDY
Apart from the aforementioned objectives of the study, the study will include a further explanation of credit management policy of financial institution with emphasis on commercial banks.
The plan of the explanation and bringing focus the procedures and steps that are required for credit creation as required by Central Bank of Nigeria (CBN) as contained in the Banking Act of 1968.
SIGNIFICANCE OF THE STUDY
This study has much relevance and implications of the case study other banking institutions and Nigeria economy as a whole.
The effect of bad and doubtful bank distress legal bank ruptcy attributable to bad management with a particular emphasis credit management calls for a study in this area.
The problems that have threatened the survival of the banking industry, problems that has eroded the capital base of bank, reduce the capacity of bank to stimulate investment within the economy as well as impairing the image and the credibility of the Nigerian Banking System and consequently gave wrong signals to wrong interested investors.
The study is therefore necessary to investigate the circumstance under which credit facilities are made available in order to assist managers and non-managers and most especially credit officers in determining which tools can be efficiently and off effectively employed to manage bank credit portfolio.
STATEMENT OF THE PROBLEM
The increasing trend in bad debt and the absence of basis business corporate advisory services in most commercial banks suggest an apparent lack of effective credit analysis and administration techniques in these banks.
An effective credit management analysis and administration techniques should reveal or be designed to prevent banks from taking undue risk which might impair its safety and financial soundness.
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