STATEMENT OF THE PROBLEM
PURPOSE OF THE STUDY
SIGNIFICANCE OF THE STUDY
SCOPE AND LIMITATION OF THE STUDY
DEFINITION OF TERMS
SUMMARY OF CHAPTERS
THE CREDIT CYCLE
METHODS OF PAYMENT
OF RESEARCH QUESTION
SIZE AND SAMPLING TECHNIQUES
OF RESEARCH INSTRUMENT
LIMITATION OF THE RESEARCH METHODOLOGY
DATA PRESENTATION AND ANALYSIS
DATA ANALYSIS AND INTERPRETATION
SUMMARY, CONCLUSION AND RECOMMENDATION
FOR FURTHER RESEARCH WORK
The purpose of credit in banks is to
earn interest and make profit. It follows that principles of goods lending
shall be concerned with ensuring, so far as possible that the borrower will be
able to make scheduled payments with interest in full and within the required
time period otherwise, the profit from an interest earned is reduced or even
wiped out by the bad debt when the customer eventually defaults.
Credit management is concerned primarily
with managing debtors and financing debts. The objectives of credit management
can be stated as safe guarding the companies investments in debtors and
optimizing operational cash flows. Politics and procedures must be applied for
granting credit to customers, collecting payment and limiting the risk of non
An important function of credit
management is credit control. This is primarily a process of deciding how much
credit should be given to customers or borrowers and ensuring compliances with
the credit terms that is given for controlling credit repayments.
avoid a liquidity storage from excessive investment.
secure an optimum balance between giving credit to make sale and the financial risks
from non-payments or late payment.
1.1. BACKGROUND OF STUDY
Banking started in Nigeria in 1892. ABC was
established in Lagos
on mutation EDC. ABC was based in South Africa
but opened a branch in Lagos
to finance the shipping business of EDC which was operating steam-ship service
and from that time commercial banking started and we have different ones with
so many branches.
After some time, some banks were
In a positive step to offer a counter
institution, European banks, the industrial and commercial bank was established
in 1929 by a group of Nigerians, this bank tried to do what the earlier British
Banks were reluctant to do by offering credit liberally to Nigerian
particularly Managing Directors within a years, it went into liquidation.
Commercial banks are banks principally engaged
in retract banking and while concentrating in large urban areas, they never
spread their tentacles to virtually all the nooks and crannies of the country
with same having off shore branches.
STATEMENT OF THE PROBLEM
The problem facing the banking
industries are very numerous and most of the problems are due to lack of
appreciations of the crucial roles that bank plays in our economy. Such problem
includes unstable micro economy within, which the banks operate.
Skye bank is a well known commercial
bank that offers full range of services such as lending of fund to customers,
loan and overdraft to companies and also discounting bills of exchange fro
national and international business men, therefore, increasing the Gross
National Product (GNP).
In this research, a bank without an
effective credit management technique is likely to encounter the following:
a credit policy from determining how much credit to give an on what terms.
with late payers and non payers
customers application for credit
procedures and credit motoring
of payment of the credit
customers payment records and receive credit terms.
PURPOSE OF THE STUDY
The objective of this research works
centres around finding ways of solving a particular problem that is determining
the effective of the credit management techniques set by Skye Bank in
controlling its credit extended to its prospective customers.
To discuss the role of banks in the
economics development of Nigeria.
To evaluate the effect of poor credit
management to bank distress in Nigeria.
1.4 RESEARCH QUESTION
is credit management?
is due for credit?
are the methods for payments?
are the procedures for calculating credit?
do we manage credit cycle?
are the policy guiding it?
1.5 RESEARCH HYPOTTHSIS
For the purpose of this study the
research hypothesis will be analyzed as follows:
Ho: The techniques employed in collecting debt
loan do not encourage quick Repayment
Hi: The techniques employed in collecting
loans encourage quick repayment.
Hi: Defect in credit management will not lead to increase in bad
Ho: Defect in credit management will lead to increase in bad debt.
OF THE STUDY
study will enable the general public and bank to know the purpose of loan.
will also find out the following:
sources of payments
risks that is involved
protection for the bank
loan structure i.e. short term medium term or long term.
AND LIMITATION OF THE STUDY
The scope of this study will cover the
appraisal and credit management in banks, in which Skye bank is used as the
case study of the research work.
The limitation of this study is based
on the extent at which data rate made available, also the problem of fund and
also the problem of time constraints.
The following terms are defined below
in order to make it easier and understandable for a layman.
monitoring and collection procedures
1. CREDIT MANAGEMENT
It is concerned primarily with managing
debtors and financing debts. It is achieved by collecting payment in accordance
with the agreed terms.
2. CREDIT POLICY
it is a rule within which credit
management operates for determining how much credit to give and on what term
and dealing with late payers including taking them to court.
3. CREDIT VETTING
It is the process of assessing customers’
application for credit. It is the systematic approach for deciding individual’s
credit limit that treats all customers fairly.
4. COLLECTION PROCEDURES AND CREDIT
This is important for collection of
cash, collection of debts risking the loss of customer’s goodwill in the
5. SECURITY OF PAYMENT
It is concerned about the credit, risk
of borrowers therefore, a bank can decide on the following:
to lend but at a high rate of interest
6. CRDIT CONTROL
It is a process of deciding how much
credit should be given to customers or borrowers and ensuring compliance with
the credits terms that are set.
Chapter one centres on the
introduction, objective, significance
It centres on the factors credit
management credit policy and collection procedure and credit monitoring
Focuses on e research methodology
Based on data analysis and summary of
Summary of findings, conclusion and recommendation
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