TABLE OF CONTENT
Title page i
Certification ii
Dedication iii
Acknowledgement
iv
Abstract v
Table of
content
CHAPTER ONE
1.0 Introduction 1
1.1 Statement of problem 2
1.2 Objective of the study 2
1.3 Research questions 2
1.4 Statement of hypothesis 2
- 3
1.5 Definition of terms 3
CHAPTER TWO
2.0 Literature review 4
2.1 Lending principles 4
2.2 Statutory and regulation requirement 4
- 6
2.3 Types of security for bank lending 6
- 9
2.4 Loan recovery in banks 9
2.5 Effect of government regulation and
control on bank lending 9
2.6 History of Sky bank plc 9
- 10
2.7 Constraints to lending
operation in Sky bank plc. 10
- 11
2.8 Loan recovery procedure 11
- 12
CHAPTER
THREE
3.0 Research methodology 13
3.1 Data collection 13
3.2 Method of data and
resources of data 13
- 14
CHAPTER FOUR
4.0 Data analysis 15
- 16
4.1 Presentation of data 16
4.6 Interpretation of
result 16
CHAPTER FIVE
5.1 Summary Finding 17
5.2 Conclusion 17
5.3 Recommendation 18
Reference 19
CHAPTER ONE
1.0 INTRODUCTION
Bank plays important roles in the economic life of a
country particularly a developing nation through the provision of banking
services. As agent of development, they provide loans and advance including a
variety of contingent facilities, which could either be short term or long
terms. This explains why credit guidelines contained in government’s monetary
circulars stipulate aggregate calling on credit creation as well as the sectoral
allocation which bank and other financial institutions must comply with during
a fiscal year.
In recent time, bank have witnessed a phenomenal
growth sin terms of loans in their portfolios a s a result of equity interest,
which of federal government has in most bank and the need to finance industrial
project in line with the nation’s rapid growth / industrialization.
Some of the facilities generally provided by bank
include: short term finance medium term finance, long term finance, building /
mortgage loans advance against produce etc.
When bank are providing these kinds of facilities and
some other are exposed to some risks. Lending has some other are exposed to
some risks. Lending has become a vital function in banking operations because
of its direct effect on economic growth and business development.
In this paper, we shall consider lending policy and
careful study and proper analysis of securities and how it’s been perfected.
Through a banker is expected too exercise
consideration skill, use his experience and techniques in analyzing credit
proposal and assessing the risks, it has been established from experience that unforeseen
situation sometimes affect the borrowers ability to pay and his has led bankers
to insure themselves in case the unexpected happens, by demanding some from security.
Securities and perfection are particularly relevant to
our situation in this court. Where some customer showing are financial
impedance resulting in overtrading, poor management, capability, loan morality
in business affairs, conflicts of; objectives in corporate and lack of proper
accountability in financial management.
Bad debts simply means loans or facilities granted to
a customer but cannot be re-couple by the bank from the customer after all
efforts has intensified. Bad debuts are emotive to banker whose stock in trade is
money, view them with dread. There can never be an exhaustive and debts as they
are as multifarious as there are diseases.
1.1 STATEMENT OF THE PROBLEM
In the years past, it has been observed that
undocumented / unperfected loans accounted mainly of the collapse and
hear-collapse of many banks both in Nigeria and broad (First Bank of
Nigeria Bi-Journal review Vol 6 1998 December).
Thus in a savannah bank Nigeria plc and Anor Vs Ajilo
and Anor 1969 help that the plain lift having failed to properly documented and
perfected. The loan document and security could not enforce repayment against
the defendant. The loan became irrecoverable. This case highlights the
importance of security perfection and the cost that could arise therefore if it
is left undone.
This write up focuses on documentation of loan
agreement and its effects on bank and by extension the whole financial system.
1.2 OBJECTIVES OF THE STUDY
The main objective of this project is to appraise the
effect securities per function and debt recovery in banking industry in Nigeria.
1.3 RESEARCH QUESTION
The research questions of this study were born out of
the huge debts which come about as a result at bank inability to realize the
security pledged due to poor credit documentation and perfection. The question
therefore are:
i.
What are the affects of poor credit documentation on
bank credits?
ii.
What are the types of acceptable securities and
documentation procedures for the purpose of lending?
iii.
What are the various types of method adopted for debt
recovery?
iv.
What should bank do when they notice any sign credits
becoming doubtful?
1.4 STATEMENT OF HYPOTHESIS
There are a lot agitation on the significance of good
securities to bank lending prior to this write-up. Some bank customers
complained that their bank deprived them from financial assistance in time of
need for investment purpose due to their inability to procedure reasonable
collaterals not minding their long standing good record with them.
In the same vein, bank have also in their bitter
experiences in loan recovery argued their position even securities are taken
for loan and advances.
What then are the cause of these incidents, is it loan
documentation and repayment problem or are there any other salicut reasons.
The hypothesis is then to test that:
Ho: That there is a relationship between poor credit
documentation and defaults in loan repayment.
Hi: That there is no relationship between poor credit documentation
and defaults loan repayment.
1.5 DEFINITION OF TERMS
This section embraces a brief explanations on specific
terms not of common usage that appeared in the body of this work such terms
includes.
Credit: This term used for an
amount of money granted by bank (lender) to a customer (Borrower) in from of
loan and advance in order to finance capital
Perfection: This is the
process of investigating the true owner of a security, its documentation and
obtaining the governors consent (in case of legal mortgage).
Documentation: This is the
term used in obtaining security in the legal from and the process of recording,
perfecting and security.
Security: This terms denotes property
pledge by a borrower as a means of guarantee for the credit grantee e.g lands,
shares etc.
Default: This is a term sued
when a borrower fails to fulfill his obligation or when he fails to repay the
amount granted to him as credit.
Debenture: It denotes an
instrument issued by a company or individual acknowledging the indebtedness of
a specified (sum outstanding from time to time) and at a stated time with
interest there of.
Stamping: This term is used as
an evidentiary purpose on the mortgage created. The mortgage created should be
stamped within 30 days of the execution.
Registration: It connotes the document
created must be required in compliance with either case law or statute and is
done at Corporate Affairs Commission within 90 days.
Insured: This terms is used by
insurance company, which means, “Risk Against Loses”
Uberrimae Fidel: This is an
insurance term, which explains that every information required must be given in
utmost good faith.
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