AGRICULTURAL LOAN DISBURSEMENT AND REPAYMENT IN NIGERIA COMMERCIAL BANKS

AGRICULTURAL LOAN DISBURSEMENT AND REPAYMENT IN NIGERIA COMMERCIAL BANKS

ABstract

The purpose of this study is to evaluate agricultural loan disbursements and repayments in commercial banks in Nigeria. In particular, adequacy and repayment status at commercial banks should be checked. In conducting this research, both. Secondary data were collected using quantitative and qualitative analysis of data and other information maintained by the Agriculture Division of Africa Bank Nigeria plc.

The analysis should conclude that agricultural loans were not effectively disbursed by Nigerian commercial banks and that beneficiaries of such loans did not repay them promptly.

CHAPTER ONE

INTRODUCTION

1.1) BACKGROUND OF THE STUDY

A commercial bank can be defined as a financial institution or company carrying on the biz of receiving monies other valuables as deposits from the public for keeping and for lending to the investors on short and medium term basis on which it charges interest such deposit or repayable on demand to the depositors or order. ADEKANYA(1993)

The early commercial bank in Nigeria were established by the colonial Govt and mainly catering for the interest of the expatriates, thus (i) financing export trade and neglecting agricultural financing. The discriminatory attitude makes some Nigeria to establishing indigenous commercial banks could be found in the country which include union bank plc, first bank plc, universal trust bank limited and afribank plc.These institutions perform such services which include the acceptance of deposits in form of cash or cheque from the public granting of loans and overdraft faculties to customers, issuance of letters credit to worthy customers and fund transfer service discounting of bills. Etc. Despite the amount of loan being channeled to the agricultural sector for industrial development by commercial banks, the agricultural sector still suffers from some in he rent problems militating against the industrial and agricultural of the nations. Also, due to lack of agricultural development, the country faces a constant shortage of basic necessities.

Due to the limited annual production of agricultural products, food prices are constantly fluctuating. If the agricultural sector were fully developed, huge amounts of foreign currency would be spent each year on raw materials essential to local industry. Farmers and other agribusinesses have no incentive to obtain agricultural lines of credit because banks have strict standards for credit ratings, payments and repayments.

Finally, due to the underdevelopment of the agricultural sector, GREENER (1990) was unable to achieve much of the foreign exchange income that would have been achieved through commodity exports from improved agricultural products. This study therefore focuses on the disbursement and repayment of agricultural loans in commercial banks in Nigeria and examines the factors opposing the orderly disbursement and repayment of loans aimed at revitalizing the agricultural sector.

1.2 STATEMENT OF THE PROBLEM

The commercial banks, farmers and other agro based

industrials are faced with problem arising from the disbursement and payment of agricultural loans

There is a problem of insufficiency of liquidityawardable to the commercial banks to meet loan applications by prospective customers or farmers due to Govt policies on reserve requirement of commercial banks. The customers and farmers irritability in repaying the loan give to them also militate against the willingness of banks in agriculture loans. Sometime the security to be offered by customers for such loans become a problem as some customer found it difficult to offer a collateral security for such loans which even tonality deprive them from obtaining agricultural loans Furness (1991).

Most farmers and other agro-based ventures customers deviate from investing the proceeds of the loan on agricultural ventures for which purpose such loans was extended during a period of cash sequence in the economy commercial banks often finds it difficult to extend agricultural loans to credit worth customers due to scarcity of liquidity. These and other problems, the research intend to investing in this study.

1.3 Purpose of the survey

The purpose of this study is to address growing food shortages, poor and inadequate equipment used by farmers and other agriculture-based industries, and the inability of commercial banks to expand facilities for repayment, security, and customers, resulting in excessive may be emphasized. On top of that I hit the bank.

The researchers believe that corrective action will be taken to overcome this predicament, so the study aims to:

1. Identify different criteria for obtaining agricultural loans for agricultural development.

2. Determine whether government agricultural finance policies are being followed by both customers and banks.

3. Review customer repayment options to ensure prompt repayment of approved facilities, including interest. 4. To motivate farmers and corporate clients to provide agricultural loans for the expansion of agricultural projects.

5. Promoting mechanized farming with facilities that can be used to procure tractors and other agricultural inputs.

1.4 Importance of research

The purpose of this study is to highlight the inability of commercial banks to provide facilities to their customers due to increasing food shortages, poor induction equipment used by farmers, and repayment guarantees and other issues facing banks. .