CHAPTER ONE
1.0  INTRODUCTION
       It is an established fact that Banking industry occupies a prominent position in the Nigeria economy today. The significance of banks stem from the fact that they are custodians of the most sought after commodity on earth. Which is money. Availability of financial capital is obviously a condition for the rapid development and transformation of any national economy.
However, since the provision and efficient management of this scarce resource is best facilitated by the existence and appropriate function of financial institutions in the economy. It therefore follows that banks have a vital role to play by making their vast financial resources available for financing and promoting economic development banks play this unique role through granting of loans which constitute a vital function in banking operations, because of its direct effect on economic growth and business development. Loans and bank lending which is the primary function of commercial banks. It is the single most important source of gross income for the commercial banks.
Lending contributes the larger part to a bank’s profit, hence, it is the backbone of banking activities however, the degrees of risk associated with lending is proportionate to it contribution to profit.
As financial intermediaries, banks assist in channeling funds form surplus economic development generally. Since these funds are owned by third demands the depositors, prudence demands that such funds should be efficiently managed to sustain the confidence of depositors in the banking system and ensure the continued soundless of the system itself and thereby minimize risk of the bank failures.
Unlike the depositor who is certain of getting his money back on demand and, or when due a lending bankers is faced with the problem of either delay in reimbursement or out right non-reimbursement by the borrowers. As in case of National Bank of Nigeria which is being managed by Nigerian Deposit insurance corporation (NDIC) due to inability to meet its numerous customer’s cash needs. The bank was crippled by the non-payment of about N800 million Naira (eight Hundred million naira lent out to customers. Recovery of these huge debts became more difficult due to poor credit administration and control reflective in subjective appraisal of loan request, improper documentation, poor perfection of securities etc.
In January 1993, the newly reconstituted management of Owena Bank Plc, discovered several cases of expenses incurred but not properly booked, unearned income over statement and above all several unsecured, unanalyzed loans which are not charged off or provisioned lack of commercial orientation is also glaring in the management and administration of staff leans in Owena Bank Plc.
By February 1993, total outstanding staff loans was at over N60 million (sixty million Naira) exceed the bank’s paid gross loans. These loans are granted at 28% interest rate per annual against the prevailing cost of loans are said to have been used not for the purpose originally intended and are not support with documentation to secure the bank’s interest.
Many bank’s in Nigeria today are facing similar problems of national bank limited and owena bank plc stated above and many lead to bank failures if not urgently addressed. In fact, the number of banks sin operation remained at 90 as at end-December, 2002 following the insurance of an operating license to one bank (bond bank Ltd) and the revocation of the operating license of another (savannah bank plc) during the year.
Nevertheless, this worrisome position of banking industry in Nigeria possibly forms the federal government’s decision to amend C.B.N Decree 24 of 1991, which centers autonomy on the Apex Bank. This amendation granted a wider power to of bank’s debtors, in addition to the earlier provision in section 52 of the principal decree which authorizes the nation’s apex bank to compile and circulate to all banks in Nigeria a list of debtor whose outstand debts to any bank had been classified by bank examines as bad debts.
From the above therefore, the need for effective administration of credit to customers cannot be over-emphasized. Thus, the effective supervision and monitoring loans to ensure that they do not turn bad forms the theme of this study. A credit to beneficial to the bank only when the principle and interest are fully paid.
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1.1  PURPOSE AND OBJECTIVE OF THE STUDY
The main purpose of the study is to measure the credit administration pattern of commercial banks using first bank Nigeria Plc as the case study.
The specific objectives of the study are:
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1.2  SCOPE OF STUDY
The study covers lending operation of first bank Nigeria plc which constitute less than one percent of the total number of banks currently licensed to operate banking business in Nigeria in accordance to decree no 25 of 1991. also, within the bank, the study will not be restricted only to the banks on credit administration and control but all activities that makes effective management of credit.
1.3  LIMITATION OF STUDY
Apart from the financial and time constraints that limited the scope of study, a bank selected out of 90 banks operating in the commercial banks in the country could not be a said to be a good representation or sample of banks required to generalized the lending policies and practices in the nigeria banking industry. It should also be noted that the officers of th bank are wary of disclosing certain or vital information often tagged as confidential because of the oath of secrecy’ sworn to by them. This equally limited the extend to which useful data were made available.
1.4  BACKGROUND OF THE STUDY
First bank of Nigeria plc, for over a century, has distinguished itself as a leading banking institution and major contributor to the economic advancement and development of Nigeria.
Founded in 1894 by a shipping magnate from Liverpool, sir Alfred jones, the bank commenced as a small operation in the office elder Dempter and company in lagos.
The bank was incorporated as a limited liability company on Marc 31, 1894, with head office in Liverpool. It started business under the corporate name of the bank for British west African (BBWA) with a paid-up capital of 12,000 pound sterling, after absorbing its predecessor, the African banking corporation which was established in 1892. This signaled the pre-eminent position which the bank was to establish in the years of operation, the bank recorded an impressive growth and worked closely with the colonial government in performing the traditional functions of a central bank such as specie in the west African sub-region.
To justify its west African coverage, a branch was opened in Accra, Gold cost (now Ghana) in 1896 and another in Freetown, Sierra Leone in 1898. These marked the genesis of the bank’s international Banking operations. The second branch of the bank in nigeria was in the old calabar in 1900 and two year later, services were extended to Northen Nigeria.
Currently with 339 branches spread throughout the federation, the bank maintains the largest branch network in the industry.
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1.5  STATEMENT OF THE PROBLEM
       One of the most important problems of the organization is lack of adequate finance to carry out their function successfully.
It is believed that availability of fund can yield so good result and contributed to the stability of an organization. Also lack of enough manpower can lead to laxity in all areas of financial management in an organization. Frustration of these desires of credit management could lead to collapse of an organization. So credit management is very important to an organization in such organization is to survive any economic crisis.
In the light of above, this research intends to find out whether this good and strong credit management which will be supported with interview and it there are laxities in any area, the research intend to sort out what measures to take.
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1.6  DEFINITION OF TERMS
1.7  PLANS OF THE STUDY
This research work is divided into (five) 5 chapters, chapter one is the general introduction of the study, background of the study, scope of the study limitation of the study etc.
Chapter two the review of related literature of the study.
Chapter three disucsses the method used in gathering information and method of analysis.
Chapter four reveals data presentation, data interpretation data analysis and research findings.
The last chapter which is chapter five discusses summary, recommendation and conclusion.