BACKGROUND OF THE STUDY
The banking industry
has been known for its intermediary role in proving financial assistance
(credit) needed in the economy. This role of financial intermediation is
carried out in so many ways. First to be mentioned is the granting of loans and
advances to customers which constitute the major part of bank lending apart
from loans and advances them are other form of bank credit like bond issued by
banks for or on behalf of the customers.
In providing credit for business venture
bank should as a matter of importance take all necessary steps to ensure that advances are granted to
those customer who can make judicious use of them so that repayment will not be
a problem. Therefore bank as a matter of importance must make use of the “five
Cs” of credit which are character, capital, capacity, condition and collateral
to asses their customer before granting them loans. Affairs of the bank can
explained by reference to the fact that “loan and advances are the largest
asset structure of Nigeria commercial Banks; it also constitute the major source at the operating income of
bank and also the most profitable asset for the employment of bank funds.
Credit (loans and advances) are
important to the bank balance, they account for the large portion of bank
income; such operating income produce from sound investment and effective
management enables the bank to:
i. Pay depositors intrerest
ii. Pay investors dividend
iii. Pay government tax
iv. Have further investment and
v. Maintain adequate reserves.
However, irrespective of how prudent a
bank may be in its lending, the fact remains that every year provision for bad
and doubtful debt should be provided for. Not all loans should be granted, a
profitable loan which is not safe should not be granted.
For banks to be successful their
corporate credit policies most be of sound procedure for monitoring and
repayment, must endure adequate credit appraisal disbursement.
Anonymous, U (2020). The Administrative Procedure Problems Associated with the Management of Credit. Afribary.com: Retrieved March 08, 2021, from https://afribary.com/works/the-administrative-procedure-problems-associated-with-the-management-of-credit
User, Anonymous. "The Administrative Procedure Problems Associated with the Management of Credit" Afribary.com. Afribary.com, 08 Sep. 2020, https://afribary.com/works/the-administrative-procedure-problems-associated-with-the-management-of-credit . Accessed 08 Mar. 2021.
User, Anonymous. "The Administrative Procedure Problems Associated with the Management of Credit". Afribary.com, Afribary.com, 08 Sep. 2020. Web. 08 Mar. 2021. < https://afribary.com/works/the-administrative-procedure-problems-associated-with-the-management-of-credit >.
User, Anonymous. "The Administrative Procedure Problems Associated with the Management of Credit" Afribary.com (2020). Accessed March 08, 2021. https://afribary.com/works/the-administrative-procedure-problems-associated-with-the-management-of-credit