AN ANALYSIS OF LOAN DEFAULT IN NIGERIA AGRICULTURAL CO-OPERATIVE AND RURAL DEVELOPMENT BANK.(A CASE STUDY OF NACRDB NKPOR ANAMBRA STATE)

ABSTRACT

The research analyzed the loan default in Nigeria agricultural co-operative and rural development bank (NACRDB).  This bank finances all forms of co-operative societies and small-scale industries.  This aimed at knowing the extent of NACRDB loan administration programme and the extent it has accomplished the objective of its establishment. Most co-operative societies are not aware of the NACRDB loan scheme. Improper loan disbursement and low supervision has contributed not render the necessary assistance to the loaned in terms of advice and training. These are the result from questionnaires. Based on the finding, the following recommendations were made:  NACRDB should ensure efficient disbursement of loan, they should create awareness for their loan scheme,  they should arrange proper programme for the loaned appropriate supervision of the loan to avoid loan diversion if necessary, they should assess aspire to give the loaned both the business and technical advice needed.  All these are aimed at efficiency to reduce the rate of loan default.

TABLE OF CONTENT

Title        …           …           …           …                  i

Approval page        …           …           …                  ii

Dedication…           …           …           …                  iii

Acknowledgement …           …           …                  iv

Abstract  …           …           …           …                  vi

Table of content     …           …           …                  viii

CHAPTER ONE

1.0  Introduction    …           …           …                  1

1.1  Background of the Study       …        …                    1

1.2  Statement of the Study  …           …                  3

1.3  Objective of the Study   …           …                  5

1.4  Research Questions              …        …                    7

1.5  Significance of the Study       …         …                   5

1.6  Scope of the study        …           …                  8

1.7  Limitation of the study   …           …                  9

1.8  Definition of terms        …           …                    10

CHAPTER TWO

2.0  Literature review           …           …           12

2.1  The Meaning of Co-operative Society…         12

2.2  The objective of the NACRDB        …           13

2.3  The organizational structure of NACRDB              15

2.4  Types of loan issued by NACRDB   …           18

2.5  Procedures for securing loans recovery         23

2.6  Causes of loan default    …           …           36

CHAPTER THREE

3.0  Research Methodology   …           …           42

3.1  Types and sources of data…          …            42

3.2  Research design            …           …           43

3. 3  Population  and sample size- –      –      –      44

3.4 Sampling Techniques-     –      –      –      –      -45

3.5  Validity and reliability of measuring instrument  45

3.6 Method of data analysis                               46

CHAPTER FOUR

4.0  Data presentation and analysis      …           47

4.1    Presentation of data tables               …        48

CHAPTER FIVE

• Summary of findings, conclusion and

recommendations        …           ..            67

5.1    Findings …     …           …           …           68

5.2    Conclusion    …           …           …           69

5.3  Recommendation          …           …           70

       References             …           …                  72

       Appendix                                                 74

       Questionnaire.

CHAPTER ONE

1.0  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 (NACRDB) 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 (NACRDB) 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 (NACRDB) 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 NACRDB 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 NAERDB’s 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 NACRDB to the prospective customers.

1.3  OBJECTIVES OF THE STUDY

       The general objective of this study is to analyse loan default in Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB).

       The specific on objective of the study include:

• To find whether or not co-operative societies secure loan from NACRDB.
• 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 NACRDB.  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 NACRDB Nkpor Zone.

       Thiswork has emanated from the performance of the co-operative credit institutions, especially the NACRDB Nigeria Ltd.  Its purpose is to help provide a true and objective position of NACRDB Nigers Ltd.  In that process, the following will be critically looked at:

• There findings will help enable us to appreciate the contributors the NACRDB 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 NACRDB.
• 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.