Measures Necessary To Minimize The High Incidence Of Bad Debts In Nigeria Commercial Banks

Measures Necessary To Minimize The High Incidence Of Bad Debts In Nigeria Commercial Banks

Chapter One

Preface.

Background Of Study.

A Bank profitable purpose is to act as a fiscal intermediate it installations the process of channelizing savings into investments and one of the avenue of realizing this ideal is by advancing effectively.

It was recommended amongst others that state possessed marketable banks should be effectiveness Banks should use the services of external advisers to director collect the debts on account classified as mistrustfulness fill and help the diversion of finances by some borrower, the banks should try as important as possible to deal directly with contractors or inventories of the borrowers as the case may be.

All business regrettably witness bad debts, but bankers whose stock in trade is plutocrat view debt prevalence with dread. noway the less, the circumstance of bad and mistrustfulness fill debts can be regarded as a delicate occupational associated with business. But for bank, it has for long been contended that, this dreaded and necessary disaster which should be kept with in nicely periphery of the total lending portfolio of the bank.

Statement Of The Problem.

African international bank was closed down by central bank of Nigeria because of the prevalence of bad debts attendant from inefficiency of the bank workers and deceitfulness.

Due to this high prevalence of bad debt which the banks are passing from their guests the central bank of Nigeria set up the recapitalization of# 25m to meet up with their guests incase any of the bank liquidate in order to settle or compensate those guests involved. And this is why Banks are incorporating themselves in order to meet the demand of the central bank of Nigeria

This unfortunate fund in the Nigeria banking diligence had debt creditors of the bank loose their further and their tips as bad debts.

Conflate between boards and operation banks or among members of the boards and operation. This caused dispersion of bank coffers and the entrenchment of dangerous operating practices.

Africans international bank was also closed down due to mistrustfulness fill debts which gave rise to fraud and other unethical practices represent the most dominate factor responsible for its torture. It can frequently traced to the veritably high prevalence of bad debts and loan losses. This could be called fraud and unskillful conduct.

Weak internal control most functional problems are by and large characteristic of poor quality operation. The qualify of operation frequently make the difference between success and failure in banking as in most frequently frauds of profitable bid.

Decade ago to the fact that all the net profit generated has been sunk into yawning gap of bad and mistrustfulness fill debt.

Objects Of The Study.

Bad debt problem has come a vital problem which the banking assiduity are facing because they’re generally known for creating of credit loans and advantages to guests and this is one of the duties or the motive of banking.

The minimization of high prevalence of bad debt being the main end and objects of this work the ideal for this study can also not be over emphasized if the goods of the debts on the bakery on the client and on the society in general is appreciated.

However the study will among other effects find the causes of bad debts by chancing out whether the under listed factors about the prevalence of bad debt and this factors include the following

* Non – adherence of canons of good lending.

· Shy analysis

· Lack of supervision of loans.

· Deceitfulness of some bank officers.

· Lending on political ground

· Low directorial skill

· Diversion of loan

· Affectation

· Recession.

The applicability of this study is under score in its desire to asset bank confirm the manifold causes of bad debts in their operation and help alert and knows his guests design offer and account operation completely the unbendable nature of his proposed or the drooping position of his account could be fluently spotted.