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1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study




3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis



4.1 Introductions

4.2 Data analysis


5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation





Chapter one portals the problems associated with the Nigeria commercial banks why serves as the introduction of the problems associated with loan recovery and it also gives the historical development of commercial banks in Nigeria. Chapter  two, lays emphasis on the loan, origin and deification and how loan play a vital role in loan lending for the economic development and money creation in our society, both the lender and borrower have a duty to perform, for an efficient and effective lending to be carried out. The conditions which the commercial banks must undergo before granting out loans to customers were emphasized in chapter. Three of this work. Despite the precautions taken by the commercial banks they still encounter series of problems in loan recovery from their customers. Among them is non-repayment of loan, unwillingness to repay etc








  • Background of the study

In recent years, loan recovery problems have been of the main problems that the Nigerian commercial banks have had to face. Those problems have been main target of policy measures all these years, though at a time it becomes main focus of policy on which was retarded as more pressing and serious each time. Today the situation in Nigerian has become very serious and seemingly intractable. The problems of loan recovery in the pig vain sense refers to a situation in which there is a major break down in the repayment agreement resulting in an on due delay in recovery or collection and in which it appears that legal action may be required to effect recovery for in which there appears to be a potential loss. Such a loan there for requires special attention on the part of the lender if it is to be collected in full within a reasonable period of time after maturity.  A truism in a commercial bank lending situation is that unless the commercial bank accesses lending risk and devices and effective way of lending against risk related to the borrowers, industry, management or operation in the quality of the loan portfolio might survive from an increase in past due debt, non accruals and charged off loans. Thus, even if the borrowers have not met the initial criteria for a desirable borrowing customers through interview and credit investigations, the rest point of emphasis in credit risk analysis is in the borrowers financial statement (specially incase of business firm). The later assists the lender to determine whether the firms operations will be able to generate sufficient cash flow to repay debt and whether its asset will be available as collaterals of course the degree of reliance on financial statement analysis is directly related to how they are prepared. Therefore deductions about credit risk levels from the analysis should necessarily be tempered with additional information from the borrower.  Commercial Banks lending objectives is to make loans that can be repaid. While minimizing her exposure to loans with poor credit quality. However every lending institution finds itself from time to time with loan for which the risk of loss is greater than anticipated, when the loan was made or in which the risk is greater than a lender would ordinarily willingly assume. This is because in the lending environment, there are basically two types of borrowers, the good and bad. It is the category of borrowers that carries a risk of default on loan repayment.


Commercial bank is defined as an institution that carries out the business of recoving money and collecting drafts from customers subject to the obligation of honouring cheques drawn upon them from time to time by the customers to the extent of the amount available on their current account. Based on this definition, the commercial bank carries out such functions as:

  • Acceptance of deposit
  • Providing loans and overdrafts
  • Drawing of cheques
  • Transferring of money

Commercial banking in Nigeria started in the 1892 with the establishment of the African Banking corporation (ABC) through the instrumentality of Elder Dempster and co a shipping company based on rive pool. Due to initial difficulties, the bank did not exist beyond 1893. in 1894 (BBNA) was incorporated in London and opened a branch in Lagos the same year C.N. Asuzu, Elements of banks with the establishment of industrial and commercial bank. The establishment of this bank was promoted by the nationalist dissatisfaction with the existing foreign banks who discrimed against Nigerian in granting of loans. However, indigenous banking era had some failures in the sense that most commercial banks established in that ere collapsed due to the granted loan to Nigerian indiscriminately. The first surviving indigenous bank survived because of the support they get form the regional government (western government) another successful indigenous bank was Agbomagbe established in 1945. The third expartriate bank British and French bank (currently) (UBA) was established in 1949, this joined the two other expatriate banks to dominate the banking business in Nigeria, the expatriate bank still neglect the indigenous entrepreneurs and concentrated in international trade and dealing with government. Since the inception of the first banking legislation there had been other banking legislating, for instance the banking legislation o 1952 that vested the power of control of banking on the financial secretary. Others are the 1958  banking ordinance and subsequence amendment 1961, 1962,1964 and the banking act of 1990.  According to Mr. C.N Asuzu in his book element of banking in Nigeria, the first bank emerged in Nigeria was British bank of west African 1894 now first bank of Nigeria followed by Bardays bank Dco 1917 now known as union of Nigeria etc.



The problems of loan recovering not only in commercial bank but all the banks as a whole is unable to pay back loan as at when due. It is true that before a loan is been given to a customer especially customer of a bank collateral is suppose to be present but some time the collateral presented may or may not be able to pay back the loan that is been collected from the banks. Again is over trusted some managers, due to because the customer always due to because the customer always put or deposit a very amount of money in their bank Amy or may not came to ask them for collateral and at last the whole money will be lost.


The objectives of the study

  1. To determine the cause of the problem which is given out loan and feeling less concern that is not been talking about collateral
  2. To ascertain the problems associated with loan recovery in Nigeria commercial bank
  3. To ascertain the factors that make loanee unable to pay back loan as at when due
  4. To ascertain the best conditions that will be appropriate to manage and checkmate the granting of loans and advances in the Nigeria commercial banks.
  5. To identify the effective policy packages that will ensure loans and advances stability and revolutionalized management actions.




For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0there are no problems associated with loan recovery in Nigeria commercial bank

H1there are problems associated with loan recovery in Nigeria commercial bank

H02: there are no factors that make loanee unable to pay back loan as at when due

H2there are factors that make loanee unable to pay back loan as at when due


The significance is that before any customer should be given loan he or she should be ask to present collateral and the collateral is not suppose to be cumbersome. Whether person is your child, wife or mother collateral should be presented. It will also serve as a reference to other researchers that will embark on this topic


The scope of the study covers the problems associated with loan recovery in Nigeria commercial banks. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


 BANKS: These mean an institution where people or business can keep their money. Banks also offers services such as lending exchanging or transferring money, they also grant overdraft to their customers

CUSTOMERS: An individual or household that purchases a particular produces for personal or household or industrial use.

COLLATERAL: These refer to money or property which is used a guarantee that some will repay a loan.


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.


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