DEBT RECOVERY IN MERCHANT BANKS IN ONISHA METROPOLIS

ABSTRACT

The researcher has purely, analyzed the appraisal of debts recovery in merchant bank in Onitsha metropolis.
The researcher intends to know whether the debt recovery in merchant banks over the years had led to distress in banks, or poor management whether debt recovery board has failed to appoint the committee to look after the distress banks.
The researcher does not want to analyze the impact created but wants qualitatively examine of the impute which the procedure has created. This will then enable the researcher to either recommend the recovery system or suggest a more suitable system for the merchant banks operations.
Apparently in the analysis of data using the percentage, the researcher found out that every technology and regulatory changes no doubt affected the cost structure of the banks.
Also considering the importance of agriculture in our country, Nigeria government should reduce the interest rates to present farmers, agricultural investors to increase their productivity.
Lastly, the debt recovery boards have been expressed on the wisdom of merging some distressed banks in Anambra State. Such opinions suggest that resulting large banks would be more efficient in providing banking services of lower cost to the society while still making profit to their owners.

TABLE OF CONTENT
Title page
Approval page
Dedication page
Acknowledgement
Abstract
Table of contents
List of tables
List of figures
CHAPTER ONE
INTRODUCTION
1.1 Statement of Problem
1.2 Purpose of the Study
1.3 Significance of the Study
Statement of Hypotheses
Scope of the Study
Limitation of the Study
Definition of terms

CHAPTER TWO
REVIEW OF RELATED LITERATURE
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
Sources of Data
Primary Data
Secondary Data
Sample used
Method of Investigation
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Data presentation and analysis
Test of Hypotheses
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
Findings
Conclusions
Recommendations
Bibliography
Appendix

CHAPTER ONE

INTRODUCTION

The origin of merchant banking can be traced to the part played by mechanist in early times in financing international trade. In London, the so-called merchant bank is seldom merchant and by no means always bankers. The title or designation merchant bank often used as a generic description of firms or institutions that operated in the financial sector whether they perform pure banking services or merchandising service or not. Although these activities were originally and still are predominantly, intimately, connected with foreign trade and with the international movement of goods, the pattern of business is constantly changing. Thus in recent times this type of bank has changed considerably both in form and structure and have acquired other functions. The result is that it has become even more difficult to arrive at a dear definition of the term “Merchant Banks”.
Over the past decade, debt recovery in merchant banks in Onitsha appears to be inconsistent, as a matter of trial and error, counter productive and against a background of unpredictable individual and corporate behaviours, have defiled any known theories.
The above situation appears very worrisome to bankers, watchers and implementers in the economy against a bank grand of rising inflation, and unemployment. It could prevent a company from getting funds from the merchant banks for operations. It could make the public form a bad opinion of their customers, persisted deficit, in banks of payment, declining growth rate and general down turn into the economic activities.

The cardinal objective of banks in lending is to ensure repayment of sums advanced. Default therefore denotes a fundamental breach in the transaction underling the contractual relationship between a creditors and a borrower, when the borrower fails or is unable to meet repayment obligations on either the sum, interest element or both. Failure to pay may be the result of understandable inability or outright refusal (recalcitrance) by the borrower.
Debt recovery efforts on strategy by a bank in the event of default are therefore natural sequential consequences of default. The effectiveness of which would depend on whether the situation of default occasioned can be regarded ad reasonably foreseeable and therefore avoidable or simply unavoidable default.
It is generally agreed that the most crucial consideration in lending are the twin elements of trust and confidence, trust in the viability and profitability of a credit proposition and confidence in the borrower infact it can be taken that the will established “cannons of lending” are merely factor employed to ascertain the existence or otherwise of these two important elements. The decision of a bank on the quantum of loan, the scope, type and value of security to be taken, are all determined by the level of trust and confidence.
Default then implies a faulty assessment of the basis of trust and confidence on the borrower or the intervention of an event outside the control of the borrower.
An appraisal of debt recovery procedures in merchant banks in Onitsha metropolis is no different from the above trend of events. It will be very proper against this view, to venture into its study and probably appraise its performance in recent times.
It is hoped that this write up will be useful to bankers, economic watchers and implementers in banks recovery efforts and that of the interim management board appointed to redeem the distress banks.

STATEMENT OF PROBLEM

Debt recovery in merchant banks play a very important roles in bringing about changes both in commercial and merchant banks aspects in Nigeria, and some states, seeing what debt recovery procedures did to these countries, now Nigeria government fights to chase but the debt had keep fit to the economy by planning the committee to look at these distressed banks.
It has been established that most of the repayment were from debts declared bad and doubtful by the banks former boards and management, officials of Central Bank of Nigeria (CBN) and Nigerian Deposit Insurance Corporation (NDIC) working in the distressed banks claimed that some of the debtors explained that the banks did not show serious commitment in recovering the debts, and that was why debtors were not keen in repaying.
However, according to business times of Ivory Merchant Bank (IMB’s) are already planning to make a case to the monetary authorities for persecution of the debtors many of debtors according to officials of another commercial bank owned by state government told business times that a large portion of the banks estimated N700 million bad debts was incurrent through loans backed by director and top executives of the banks.
Failure to pay outstanding financial obligations by otherwise financially “hearty” borrowers. This could be the result of fall in expectations, frustration of goals by unforeseen circumstances, faulty investment decisions or strategies, unexpected adverse policies.
Failure to pay by a borrower that is not in business or is otherwise insolvent.