AN ASSESSMENT OF CREDIT MANAGEMENT IN NIGERIA COMMERCIAL BANKS (A CASE STUDY OF UNION BANK OF NIGERIA PLC). A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
The purpose of this research is to examine the impact of credit management on commercial banks. The introduction of the prudential guideline in banking industry, the volume and value of loans and advances classified into non-performing account has continued to increase in bank lending. Obviously this has adverse effect on banks since it affects their cash flow and impair profitability. Most loans and advances go bad because of the inadequacy in credit management and recovery procedure of banks. Appraisal of lending vis a vis the credit management of banks and the impact of the application of prudential guidelines on credit, form the major objective of this study. Union bank of Nigeria Plc Okpara Avenue Enugu was used as a case study with a view to highlight the effectiveness, the adequacy or otherwise of the credit management policy of Nigerian commercial banks with a view to finding the causes and consequences of non-performing loans and advances. The consequences causes upon this, the researcher employed a population size of 500 Staff Bank Plc, Okpara Avenue, Enugu made up of the management accounting and administrating staff of the bank. The population sample randoming selected is 119 staff of the bank. The researcher also employed simple percentage frequency statistical to analysis of the data collected. The researcher finding show that there exist policy frame work fork for credit management in Commercial Bank in Nigeria, the problem however has been problem execution and fellow up. It is the recommendation of the researcher that lip services should not be the practices in credit management of the Commercial Bank should ensure diligent and prudent credit management in the Banking Industry.
Background of the Study
Banking is essentially an international business especially now that domestic financial markets in many countries are being internationalized. In modern economy there is a distinction between the surplus and economic units and the deficit economic units. Consequently, there is a separation of savings and investment mechanism. This has necessitated the existence of financial institutions whose job includes the transfer of funds from savers to investors. One of such institutions is the commercial banks. The intermediating roles of commercial banks places them in a position of ‘Trustees’ of the savings of surplus economic development. The techniques employed by bankers in this intermediating functions should provide them perfect knowledge of the out-come of a lending such that funds will be allocated to investors in which the probability of full repayment is unity.
However, in practice, the reverse has always been the case. Almost all lending decisions are made under condition of uncertainty, the risk and uncertainty associated with lending decision situation are so great that the concepts of risk and risk analysis need to e employed by lending bankers in order to facilitate sound decision making and judgement.