AN ASSESSMENT OF LENDING PROCEDURE THE NIGERIAN MONEY DEPOSIT BANK
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TITLE PAGE
AN ASSESSMENT OF LENDING PROCEDURE THE NIGERIAN MONEY DEPOSIT BANK
BY
---
EE/H2013/01430
DEPARTMENT OF ----
SCHOOL OF ---
INSTITUTE OF ---
DECEMBER,2018
APPROVAL PAGE
This is to certify that the research work, "an assessment of lending procedure the nigerian money deposit bank" by ---, Reg. No. EE/H2007/01430 submitted in partial fulfillment of the requirement award of a Higher National Diploma on --- has been approved.
By
--- . ---
Supervisor Head of Department.
Signature………………. Signature……………….
……………………………….
---
External Invigilator
DEDICATION
This project is dedicated to Almighty God for his protection, kindness, strength over my life throughout the period and also to my --- for his financial support and moral care towards me.Also to my mentor --- for her academic advice she often gives to me. May Almighty God shield them from the peril of this world and bless their entire endeavour Amen.
ACKNOWLEDGEMENT
The successful completion of this project work could not have been a reality without the encouragement of my --- and other people. My immensely appreciation goes to my humble and able supervisor mr. --- for his kindness in supervising this project.
My warmest gratitude goes to my parents for their moral, spiritual and financial support throughout my study in this institution.
My appreciation goes to some of my lecturers among whom are Mr. ---, and Dr. ---. I also recognize the support of some of the staff of --- among whom are: The General Manager, Deputy General manager, the internal Auditor Mr. --- and the ---. Finally, my appreciation goes to my elder sister ---, my lovely friends mercy ---, ---, --- and many others who were quite helpful.
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The study assessed lending criteria of deposit money banks in Nigeria. The reliance on capacity, capital structure, collateral, character and condition as lending criteria of DMBs in Nigeria were examined. A descriptive survey design was employed on sampled respondents comprising credit officers of First Bank of Nigeria Plc., Guaranty Trust Bank Plc., Zenith Bank Plc. and UBA Plc. An independent-sample Kruscal Wallis test was used to present the relationships between the study variables and Cronbach Alpha Coefficient was used to test reliability (internal consistency and stability) of the instruments. The findings indicated that there is no significant difference in how DMBs rely on lending criteria. It was discovered that business plan, sales growth rate, borrowers’ business net worth, financial records, and business capitalization of borrower have significant relationship with loan performance. The study also found that capacity, capital, collateral, character and condition as lending criteria play important role in ensuring loan performance. It was recommended DMBs should make a detailed assessment of sales growth rate through use of tools like ratio analysis to judge the attractiveness and creditworthiness, liquidity levels, efficiency, profitability and leverage of a given company before financing. It is also recommended that DMBs should assess both the past and present records of borrowers to capture key issues like the capital adequacy, capacity of the applicant and repayment history.
TABLE OF CONTENTS
Title page i
Certification ii
Dedication iii
Acknowledgement iv
Table of content v
CHAPTER ONE
1.0 Introduction
1.1 Statement of research problem
1.2 Objective of the study
1.3 Limitation of the study.
1.4 Research methodology
1.5 Significance of the study
1.6 Definition of the terms.
1.7 Plan of study
CHAPTER TWO
2.0 Literature review
2.1 Lending as a function of money deposit bank
2.2 Lending procedure in union bank.
2.3 Classification of account is union bank.
2.4 Year 2011 union bank analysis of loan and advance by performance.
2.5 Prudential guideliness.
2.6 Security for bank lending
2.7 Lending and credit policies money deposit bank
2.8 Procedure for bank lending
CHAPTER THREE
3.0 Research methodology
3.1 Source of data
3.2 Population of size of the study
3.3 Limitation of methodology
CHAPTER FOUR
4.0 Data presentation, data analysis and interpetation of results.
4.1 Data presentation
4.2 Data analysis.
4.3 Interpretation of resuls.
CHAPTER FIVE
5.0 Summary, Conclusion and Recommendation
5.1 Summary
5.2 Conclusion
5.3 Recommendation
References
CHAPTER ONE
INTRODUCTION
The Banking Sector is part of the Nigerian Financial system refers to the totally of the regulatory and participating institutions, including financial markets and instruments involved in the process of financial intimidation. Including financial markets and instruments involved in the process of financial intemidatin. The banking industry in Nigeria is the Bedrock of the economy. The banks and other financial institution Act no. 25 of 1991, define “Bank” as one licensed under the act and banking business as the business of nearing deposits on current saving or other similar Account and paying or collecting cheque (Section 62 BOFIA)
From these definition, banks act only as intermediation agents by mobilizing financial resources from the surplus unit in an economy and channeling the same to the deficit unit for economic development. The banking institution do not own those resources, but rather, in accordance with the agency hypothesis. These institution act the risk manage of the funds. With regard to the requirement for protection of the right and interest of their innumerable depositors, establishment for economic development, bank are expected to ethnically pursue the integrity, impartiality, reliability, transparency and social responsibility (cause 1999, Dogarawa 2004)
The lending process is relatively straight forward service of activities involving two principal parties whose association ranges from the initial loan request of the successful or unsuccessful repayment of the Loan. Most students of banking and accounting would agree that process is an independent but the exact dependencies are rarely articulated in a rigorous manner. One of the purpose of this is to investigate association between at least two important aspect of the lending process namely; The credit evaluation stage and the sequence of events.
Through storage and the sequence of evens deposit banking interspread other parts of the world and with time they became organized those Gold Smiths issued transferable receipt on the Security of Gold deposited by customer and hence improve the way for the development of current account bill discounting, and loan facilities.
The gold smith realized that only small qualities of the deposited gold and silver were actually demanded for. This led them into lending to other needy customers. In the contemporary operation at banking sector, small, medium large scale industries were developed and perhaps controlled by banking through lending.
Banks play a significant role in mobilizing savings to fuel investment and growth. Apart from their role in financial intermediation, banks have been shown to contribute to general economic stability. This integral link has been most evident in the Nigerian Financial crisis where the economy was adversely affected when banks were left weak and vulnerable to external shocks. At the centre of Nigeria’s economy has been an evolving banking system. That has been in existence prior to country/s independence from great Britain in October 1960, Nwankwo (1975) holds that formal banking began in Nigeria in 1982.
A typical credit policy of a bank should have he board of Director as the Apex of approving authority of loans. Limits are usually delegated downward from the board of directors to loan committee and other.
Officers in the credit or advances development in the head of the down to area Managers and to branch mangers. Their limits are delegated in writing t ensure adheres to leding limits, central bank Examiners and external auditors are normally involved in monitoring loan granted by bank officials.
In the last decade, these has been tremendous in number of corporate failure particular in the financial sector in the century the failed bank “Tribunal report in 1997” stated the reason for money deposit banks failure as follows:
i. Customers inability to make repayment on the loan or credit facilities collected from their banks.
ii. The canon of lending an lending policies.
1.1 STATEMENT OF THE RESEARCH PROBLEM
Not only organizational control and management of such bank in poor control light, also determine the level of confidence the public in operation of the banking industry as effective channel of lending funds.
There was mass falsification of records to deceive the regulators and the public Sanusi (2013) report further that a lot of the supposedly raised by the so called “mega banks” was fake Capital financed from depositor fund.
For example, 30 percent of the share capital of some banks was found to have been purchased with customers depositors. A bank also reported used depositors fund to purchase about 80 percent of it’s fund public offer (IPO). It paid #25 per share with the shares were trading at on the Nigeria stock exchange and those shares later collapsed to under #3.00. Therefore the following amongst others are related problems to this research work, there is no proper lending procedure for bank lending the various procedure for banking adhere. To management, the performance of bank lending can be overview in money deposit banks.
Effort will be made in this research work to examine the various procedure involved in the granting of credit facility to worth of customer Bank so far
1.2 OBJECTIVES OF THE STUDY
This research work aim at considering the various lending procedure which bankers and management should bear in min before credit facilities are been considered for prospective customer, Also to measure and overview the performance at bank lending in relation to the altitude of the customers. To estimate role and procedure of bank to the growth of the economy.
This Study was set to:
1. Asses the difficulties that money deposit banks such in the process and in the implication of improper lending.
2. Determine the implication of improper lending procedure as it affect the economy of the banks.
3. Proper ways at ensuring more efficient lending policies in money deposit banks.
4. Examine the various procedures put in place by management of money deposit banks interns of repayment altitude of borrowers.
1.3 LIMITATION OF STUDY
This research work not be complete without mentioning some of the limiting factors of this study that has been embarked on which include the followings:
i. Time constraints to make adequate findings.
ii. inadequate of fund in getting extensive data.
iii. The writing of the project is within the last academic period academic work and providing for relevant data in different places.
iv. Relevant altitude of institution to reveal and release information necessary of the study.
v. Finally, financial inadequacy is one of the major problems encounter doing the course of gathering data and information.
1.4. RESEARCH METHODLOGY
The research methodology listed the problems or phenomenon being investigated under this study. The following research methodology are relevant.
i. What improvement would procedure to the lending procedure?
ii. is there no proper lending procedure in money deposit banks.
iii. Does collateral securities constitute a major requirement for granting of credit facilities?
iv. Does management engage in proper are given? At customer project before credit are given?
v. How would you assess application for loan, procedure and disbursement?
1.5 SIGNIFICANCE OF THE STUDY
This research work will throw more light on the lending procedure and also examiner the ways in which there can be proper monitoring so as to avoid bad lending in money deposit banks. This study will also be designed to be of immense benefit to all leads of management in the banking industry especially the credit recovery department of most banks who deal with the responsibility of giving credit facilities and also making assessing the lending procedure of money deposit bank and the mode of repayment considering a the relationship between customer and the bank and also the past record of money deposit banks operations.
It will also serve as a guide to bank customer who will wish to seek for credit facilities from money deposit banks; in a way that customer will know the resource involved and the types of collateral security for such credit facilities. It may also be useful to professionals’ bodies in their report about the performance of Money deposit banks in the past few years.
Finally, it will also serve as a useful piece of information for both accounting a finance studying in higher institutions and to people who want to know how best the banking sector has contributed to the economy.
1.6 DEFINITION OF THE TERMS
INTERMEDIATE:- The process at mobilizing fund from the surplus unit to the deficit Unit by money deposit bank(okigbo F.N.C Nigeria’s financial system structure and growth, Longman group (1979).
NON-PERFORMANCE EXPOSURE: This otherwise known as no property articulate loan and this include sub-standard loan, doubt loan and bad loan (money banking and finance they and practice international education book and publisher, Owerri Nzotta S.M 1999).
PLEDGE:- This is delivery a goods or document to title at goods to the lenders as security for a debt (Mather I.C 1972) securities acceptance to the lending bankers, water law and son publisher.
MORTGAGE:- This can be defined as a conveyances of legal or equable invest in properties by the borrowers or third party known as mortgage to the under described as the mortgage as security for the payment of debt (Okories Uche 2011), practice of bank and credit administration.
CRITICIZED LOAN:- Loan that are performing was not followed it’s own policy or failed to get full document from the borrower (Rose P.1996) money deposit bank management(Bank lending policies and procedure) time mirror higher education group in U.S.A page3, 64-67
DISTRESS:- A situation where bank is unable to honor the financial obligation as at when due (oloyede .B 1999) “Principal of Money and banking” for the right educational publisher.
REVOLVING FACILITIES:- These are facilities with produce or stage repayment term but with specific upper limit e..g overdraft and other revolving credit that are renewable periodically (Odozi V.A 1997) “ The future of Nigeria financial industry published university Ibadan).
CHARACTER:- This has to do with the reputation or integrity of a person or Company a honest person or Organization (Sayemah R.K. 2000) it practice of banking F & S publisher limited Lagos.
BANK: It is an organization that provides various financial services to its customer.
INFORMATION: This is that human responsibility to data through the lending procedure at the bank their customer by means of known invention used in their representation.
1.7 PLAN OF THE STUDY
The study or research is divided into five chapters. Chapter one s divided into introduction, objective of the study, statement of research, problems, limitation of the study, research methodology, significance of the study, definition of the term and plan of the study.
CHAPTER TWO: The chapter one of this work has been displayed above. The complete chapter two of "an assessment of lending procedure the nigerian money deposit bank" is also available. Order full work to download. Chapter two of "an assessment of lending procedure the nigerian money deposit bank" consists of the literature review. In this chapter all the related work on "an assessment of lending procedure the nigerian money deposit bank" was reviewed.
CHAPTER THREE: The complete chapter three of "an assessment of lending procedure the nigerian money deposit bank" is available. Order full work to download. Chapter three of "an assessment of lending procedure the nigerian money deposit bank" consists of the methodology. In this chapter all the method used in carrying out this work was discussed.
CHAPTER FOUR: The complete chapter four of "an assessment of lending procedure the nigerian money deposit bank" is available. Order full work to download. Chapter four of "an assessment of lending procedure the nigerian money deposit bank" consists of all the test conducted during the work and the result gotten after the whole work
CHAPTER FIVE: The complete chapter five of design and construction of a "an assessment of lending procedure the nigerian money deposit bank" is available. Order full work to download. Chapter five of "an assessment of lending procedure the nigerian money deposit bank" consist of conclusion, recommendation and references.
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