SIGNIFICANCE OF BANK CREDIT TO THE DEVELOPMENT OF NIGERIA BANKS (A CASE STUDY OF UNITED BANK OF AFRICA PLC)

SIGNIFICANCE OF BANK CREDIT TO THE DEVELOPMENT OF NIGERIAN BANKS

PROPOSAL

1.0   INTRODUCTION

In a developing country like Nigeria, the significance of bank credit to a firm cannot be over emphasized.

        It is there necessary that everybody known the roles played by banks through their credit in developing Nigeria firms and the economy of large.

        Although many of use have heard about bank credit and we pass through the bank on daily basis, majority do not known the vital rate played in our fast developing Nigerians various types of banks credit that exist and how the investors apply these credits to the development of the nation’s economy.

        In order to succeed in life, a man does not only work hard, but he also looks for means to improve on his work. These are situations whereby a man has all the skills needed to set up a business but does not have the means to the end of the whole show.

        That is why we feed that it timely at this point that is why we feed that it timely at this point o let people know the investment and now this will lead to the development of the nation at large source of financing both small scale and medium scale.

        Finally, many educated people do not know the procedures of obtaining bank credit. All the foregoing have therefore influenced and dictated the topic the significance of bank’s credit to the development of Nigeria Banks with special References to unit Bank for Africa Plc.

1.2   STATEMENT OF THE PROBLEM

        Bank makes most of their profit from lending but there are some problems limiting the ability of bank to lend.

        However, this study provides solution to the problem of bank credit and some of the problems are.

1.          Operation of central bank in regulating the volume of money of circulation for example the uses of Bank rate open market operation, special directive and cash deposit ratio.

2.          Inability of borrower the present acceptable security to bank.

3.          Unwillingness of customer to deposit their money in the bank.

4.          Unwillingness of members of public to borrow from the bank.

High interest rate charged by commercial bank on loan granted to public.

1.3   RESEARCH QUESTIONS

        The research questions on this study are:

1.          Is there any relationship between high interest rate and incidence of bad debt? Bank DCO between 1894 – 1933

The dominance of these two British Banks was challenged in 1948 by the arrival of British and French Bank now called united bank for Africa Plc dominate early Nigeria deposit money bank. The foreign bank comes principally to render services in connection with international trade, so their relationship at that time was chiefly with the expatriate trading companies and with the government. They largely ignored the development of local African entrepreneurship. International Bank for West Africa is of the late Arrival among the expatriate banking Nigeria having been established in 1959, originally it was known as banquets international pour Afrogue accidental which has a number of consortiums of French and British banking interest and a principal finances of groundnut trade in neighboring Niger republic. These four expatriate bank have since been joined by many other varied national interest the banking sector in Nigeria has undergone significant trans for motion both in term of number and product creatively and the level of operation which was a result of economic return embodied in the structural adjustment programme (SAP) in 1986. In term of growth in the number of banks, the deposit money bank operating during that year were 12 with 27 branch nation wide, this number grew to 54 branches for the merchant bank in 2000 with the introduction of universal Banker’s in 2001. However, in 2003 and 2004 and 2004, the number fell to 89 and 87 respectively. In order to make Nigeria bank globally competitive, the central bank of Nigeria, July 6, 2004 announced a reform programme for national banking

1.4   OBJECTIVES OF THE STUDY

        This study aims to examine the impact of bank credit to development of Nigerian Banks. Secondly to expose the prospective investors to various credit available in the bank which the banks are ready and willing to grant such investor require for the credit facility. The research also feels abliged to let the reader of the project know how bank, let the reader of the project know how bank, through it credit helps in encouraging small scale firms provided towards the development of the nations banks. They finally, after a thorough pursue of this project, reader will come to know who is qualified to apply for bank credit, the procedure for obtaining such credit and how such credit, must be applied. The project will not commend the bank for its service and give recommendation on where necessary, hence, thus who are business oriented but do not have the means or to execute such business, will arrive maximum benefits from the write up to the various bank credit to them and how it can be graded.

1.5   RESEARCH HYPOTHESIS

        There is one major hypothesis that forms the root of this study. The findings will lead to acceptance or rejection of this hypothesis.

Ho: There is negative effect on significance of bank credit to the development of Nigeria banks.

Hi: There is positive effect on significance of bank credit to the development of Nigeria banks.

1.6   SIGNIFICANCE OF THE STUDY

        The result of the study will be beneficial to different people in different ways. It will be beneficial to stakeholders in development banking industry, management and staff of the development – banking sector where achievement has been minimal.

        The study will benefit the public who will understand the role played by development banking and use to apply for micro credit loans. It will be equally beneficiary to investors who applied for medium and long-term loan on how development banking finances capital projects. It will also stimulate new thoughts and ideas on how development banking in Nigeria carries out its activities

        Finally, the study forms the basis upon which further research can be activated.

1.7   SCOPE AND LIMITATION OF THE STUDY

        There are many deposit money bank and financial institution that grant loan for the development of the nation’s economy.

        The researchers intends to carryout research work on the significant of bank credit to the development of Nigeria Bank. Using united Bank for Africa Plc as a case study. However, the research work been limited as to insufficiency of fund.

        However, effort has been made to ensure that the above limitation did not lender effective completion and quality of research work.

1.8   DEFINITION OF TERMS

1.     RESUCITATE AILING INDUSTRIES: This bank resuscitating ailing industries that can operate competitively in the country economy.

2.     LOCAL SOURCE OF FUNDS: These are funds provided to the development bank by the federal government of Nigeria and the central bank of Nigeria.

3.     INTERNATIONAL SOURCES OF FUNDS: This is a way by which development bank obtain foreign loans and grants from international agencies.

4.     ABSORBTION OF EXCHANGE RISK: The bank provides facilities that will encourage the absorption of exchange risk encountered by funds users in respect of foreign dominated loans.

1.9   ORGANIZATION AND PLAN OF THE STUDY

        The research proposal of the topic, significance of bank credit to the development of Nigeria banks.

CHAPTER 1     -       Introduction

CHAPTER 2     -       Literature review

CHAPTER 3     -       Research methodology

CHAPTER 4     -       Lending against security

CHAPTER 5     -       Summary, conclusion,                                  recommendation

Department of banking and finance,

Institute of finance and   management studies

Kwara state polytechnic,

Ilorin, Kwara state.

28^th May, 2014.

The manager

United bank of African plc (UBA)

Ilorin.

QUESTIONNAIRE

Dear Sir,

          I am a final year student of kwara state polytechnic Ilorin. In partial fulfillment of the requirement for the award of national diploma (ND) in banking and finance, I am conducting a research titled significance of bank credit to the development of Nigeria banks.

(A case study of united bank of African plc)

          I respectively request your assistance in filling the attached questionnaires with complete honest. I guarantee you that the information provided will be handled with utmost confidentiality and I promise that the information you provide will be used strictly to advance the course of knowledge.

    Yours faithfully

Babatunde Damilare

QUESTIONAIRRE ON THE SIGNIFICANCE OF BANK CREDIT TO THE DEVELOPMENT OF NIGERIA BANKS

(A CASE STUDY OF UNITED BANK FOR AFRICAN PLC, ILORIN)

Kindly complete the question below by ticking in the appropriate boxes and right space provided

SECTION A

PERSONAL INTERVIEW

i.            Name:________________

ii.          Department:_________________

iii.        Sex: (a) male (  ) (b) female (  )

iv.         Age: (a) 20-30 years (  ) (b) 31-40 years (  ) (c) 41-50 years above (  )

v.           Marital status: (a) married (  ) (b) single (  ) (c) divorced (  )

vi.         Educational qualification: (a) WASCE/GCE (  ) (b) a level/OND (  ) (c) HND/BSC (  ) (d) other specify (  )

vii.       Banking experience: (a) 1-5 years (  ) (b) 6-10 years  (  ) (c) 11 years and above (  )

SECTION B

viii.     viii. does the inadequate of customer deposit bring limitation on the power of lending: (a) yes (  ) (b) No  (  ) (c) indifference  (  )

ix.         is the true percentage of deposit granted as loans: (a) certainly (  ) (b)uncertainly (  ) (c) indifference (  )

x.           does banking lending base on security (a) certainly  (  ) (b) uncertainly (  ) (c) indifference  (  )

xi.         can a farmers who need loan without security get loan  (a) yes  (  ) (b) No  (  ) (c) indifference  (  )

xii.       can a small firm go to bank for loan provide it has good security (a) certainly (  ) (b)uncertainly (  ) (c) indifference  (  )

xiii.     is it true that through banking lending government favour some economic sector (a) yes (  ) (b) No  (  ) (c) indifference  (  )

xiv.     does the bank also benefit from bank lending (a) yes (  ) (b) No  (  ) (c) indifference  (  )

xv.       does bank have a gain from lending (a) certainly (  ) (b)uncertainly (  ) (c) indifference  (  )

xvi.     what terms of loan it suitable for customer (a) short-term  (  ) (b) long-term (  ) (c) middle term  (  )

SECTION C

xvii.   General comment:________________________________

___________________________________________________

xviii. Recommendation:________________________________

___________________________________________________

TABLE OF CONTENT

Title page

Certification

Acknowledgement

Proposal

Table of content

CHAPTER ONE

1.1      Introductions

1.2      Statement of problem

1.3      Research questions

1.4      Objectives of the study

1.5      Research hypothesis

1.6      Significance of the study

1.7      Scope and limitation of the study

1.8      Definition of key terms

1.9      Organization plan of the study

CHAPTER TWO

2.1      Literature Review

2.2      Historical Background of the case study

2.3      Significance of Bank credit to the Development Nigerian banks

2.4      Concept of Bank Credit

2.5      Lending policies and objectives

2.6      Canons of lending

2.7      Lending against security

2.8      Land and security

CHAPTER THREE

3.1      Methodology

3.2      Source of Data

3.3      Primary source

3.4      Secondary source

3.5      Data Techniques

CHAPTER FOUR

4.1      Data presentation, analysis

CHAPTER FIVE

5.1      Summary

5.2      Conclusion

5.3      Recommendations

5.4      References