CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
In 2001 Nigeria in the quest to offset
debt crises of economic problem mapped out specialized banks primarily set to entrance
investment in agriculture and finance macro and micro credit especially within
the rural communities. Such banks are
Nigerian agricultural co-operative and rural bank development banks, industrial
bank, and mortgage banks. They grant
loans to small holders and large investment holders. These banks were designed as an avenue to get
in contact with numerous farmers and business investors at the grass roots
level. Nigerian agricultural co-operative
and rural development bank is aimed at financing basically agricultural
co-operative and other co-operative societies in the small scale business.
The research for the recovery of loans
from clients include: lack of trained and experienced personnel in agricultural
financing and loan administration on most of the commercial and merchant banks
default in loan repayment resulting from poor project appraisal or management
as well as outright unwillingness to repay by some borrowers, also problem
related to settlement of loans is caused by the bank to file claims in
accordance with procedure and passion stipulated by the banks, improper loan
disbursement and poor supervision. Another problem could be caused by delay in
approval due to low capital base on the banks as a result of inflation in the
economic. This delay may lead to
misappropriation of funds which might eventually lead to losses.
The observed trend is that Nigerian
Agricultural Co-operative and Rural Development Banks and other financial
institutions are experiencing a high level of loan losses each year due to the
shortcomings indicated earlier. This is
the obtaining at an insight into the problem of loan recovery and offering
adequate and requisite suggestion.
This is the main reason why analysis of
the loan default in Nigeria agriculture Co-operative and rural development
banks with the view of obtaining an insight in to the problem of loan recovery
and offering adequate and requisite suggestion.
1.2 STATEMENT OF THE PROBLEMS
Special banks have been set up in the country to advance loan and credit for development purpose. Incidentally these banks have always find it difficult in recovering the advanced loans especially Bank of agriculture which is the focal point of study. In problem of credit recovery by these banks, it can be seen to range from lack of collateral. Commitment, lack of trained and experienced personnel in agricultural financing and loan administration, to the default in loan repayment negotiation, poor project appraisal or poor project management, as well as simple uncollingness of the borrower to repay borrowed money, equally seen as a problem towards loan recovery is whether the bank supervised the loan given to the borrowers, the inadequacy of the funds guaranteed in an inflating economic as well as low capital base ion the funds and finally difficulties associated with the deregulation of the financial market and distress of the banking industries in “go” which reduced the interest to participate in Bank of agriculture operations, against these established shortcomings, the work will methodically study these areas of shortcoming and suggest the solutions to the problem, for future guide against credit and loan defaults by Bank of agriculture to the prospective customers.
1.3 OBJECTIVES OF THE STUDY
The general
objective of this study is to analyse loan default in Bank of agriculture
The specific on objective of the study
include:
- To find whether or not co-operative
societies secure loan from. Bank of agriculture
- To determine the condition for such
loans.
- To
determine and examine the factors responsible for the loan default.
- To
determine and find out the problems that affect the organization in loan
administration.
- To
find out the credit burden of such loan.
1.4. SIGNIFICANCE OF THE STUDY
This study well expose the ways by which
loan default in co-operative movement.
It is very big significant part from stimulating and paving way for
further studying of this area, it will also provide a clear standing of these
defaults and growth affecting Bank of
agriculture And it will also expose how
good management loan can bring about greater happiness among co-operative
co-operators, co-operative bodies individuals, all loaned and Bank of
agriculture Nkpor Zone.
Thiswork has emanated from the performance of the co-operative credit
institutions, especially the Bank of agriculture Nigeria Ltd. Its purpose is to help provide a true and
objective position of Bank of agriculture Nigers Ltd. In that process, the following will be
critically looked at:
- There findings will help enable us
to appreciate the contributors the Bank of agriculture has made so far in the
general economic and industrial development of Nigeria especially as regards in
financing of co-operative societies.
- It will also guide co-operative
societies in tackling the various credit financing problems facing them and
make full utilization BOA.
- The
study will also help those who may have need for further research on the
financing of co-operative societies by development banks.
- The
findings will also help to make recommendation and suggestions for further
improvement of the present situation.
- Lastly,
the work will be useful in addition to the existing research work, in the area
of loan disbursement and recovery in our country and hence will serve as a
reference to further researchers.
1.5 SCOPE OF THE STUDY
This
study covers the operations of BOA Nkpor Zonal Office withregards to its loan disbursement and recovery. It looks at the operations of the banks in
granting financial assistance to co-operative societies who are the users of
fund to ensure their investment. It also
talk about how the BOA will uplifted to avoid failure in the society, with this
it will enable the co-operative society to grow higher than expected with the
help of the financial assistance.
AN ANALYSIS OF LOAN DEFAULT IN NIGERIA AGRICULTURAL CO-OPERATIVE AND RURAL DEVELOPMENT A CASE STUDY OF BANK OF AGRICULTURE, NKPOR ANAMBRA STATE
