LENDING PRACTICES OF NIGERIAN COMMERCIAL BANKS AND THEIR ROLE AS PROVIDER OF FUNDS TO BUSINESS ENTERPRISES
LENDING PRACTICES OF NIGERIAN COMMERCIAL BANKS AND THEIR ROLE AS PROVIDER OF FUNDS TO BUSINESS ENTERPRISES
No Thumbnail Available
Date
1999-09
Authors
AMINU, HAMMAYO
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The main purpose of this work is to examine the sources of bank finance
available to business enterprises: and the problems encountered in
obtaining them. It will also attempt to look at the problems militating
against the perfonnance of banks in the provision of such finance. A case
study of African International Bank Limited will be made to buttress the
position.
The study looks at the development of commercial banks ,their
development in Nigeria and the types of credit facilities they offer. The
study also sought probe into commercial lending & effectiveness of
lending practices of African internal onal bank Ltd. in carrying out the
above. The primary sources of data consist of information derived from
the banks officials and interviews with some customers while the
secondary sources include the bank's annual reports and review of
relevant literature: Annual reports aid statement of accounts of central
bank of Nigeria and the Nigerian deposit insurance corporation.
The study reveals a great similarity in the various lending practices and
constraints faced by commercial banks. While there has been growth in
levels of credit, the maturity distribution, security pattern & repayment
methods have been unsuitable. A few large establishments have
monopolized credits making it difficult for the vast majority of smallscale
industries to secure access. The emphasis on provision of security
has also tended to limit credit to that group.
Nigerian commercial banks have been inefficient in mobilization of
personal savings thus limiting their credit lending abilities whilst their
marketing efforts were found to be largely limited to image enhancing
advertisements rather than innovative product and service development
geared toward the attraction of deposits.
The prohibitive cost of borrowing has discouraged same and
consequently depressed investment in the productive sectors.
Borrowers were often found to withhold relevant and reliable information
thus complicating assessment and escalating the banks risks.
Suggestions proffered from this work include;
• Reorientation and retraining of bank personnel in techniques adapted
toward the country's development needs.
• Delegation of processing and accessing authority to bank branches in
order to increase their discretion towards customer's credit requests.
• Government should assist banks by establishing rediscounting /
refinancing facilities on the commercial banks" loans as a cushion for
mismatching of deposits and loans maturities while also providing a
policy on technical support for the entrepreneur.
• Formation of cooperative societies will assist in generating credit to
members while bodies like manufacturers association of Nigeria should
be encouraged to develop banks for assisting their members.
• Low bank density could also be resolved where the central bank promotes
the development of community banks and encourage the establishment of
bank branches after borrowers must have demonstrated their managerial
competence to successfully execute their projects.
• Further study is necessary in the future to assess and examine
developments in the banking system; the effects of bank performance and
the way forward particularly considering the dynamism of the system
Description
BEING A PROJECT SUBMITTED TO THE DEPARTMENT OF BUSINESS
ADMINISTRATION, FACULTY OF ADMINISTRATION IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE
MASTER DECREE OF BUSINESS ADMINISTRATION (MBA) OF THE
AHAMDU BELLO UNIVERSITY, ZARIA NIGERIA
SEPTEMBER, 1999
Keywords
LENDING,, PRACTICES,, NIGERIAN COMMERCIAL BANKS,, THEIR ROLE,, PROVIDER,, BUSINESS ENTERPRISES