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In Nigeria, Commercial Banking dates back to 1894 when the Bank of British West Africa (BBWA) was established.

Since then, the general concept of the Nigerian Commercial Banking has changed and transformed in various degrees and dimensions; particularly, the growth in terms of numbers has been quite phenomena.

For example, this development has increased to sixty-six (66) as at 31st December 1990, the number of commercial bank in the country. This was unexpected because various policies put in place so as to achieve a realistic and reliable exchange rate for naira disrupted price levels.

There was a multiplier and down stream effect which crystallized in an explosion of funding requirement in all economic endeavours. It was without doubt, (clearly) that the injection of fresh credit and increased efficiency in the service.

Deliveries from the key financial sub-sector are imperative for full realization of the economic reforms being pursued under the Structural Adjustment Program (SAP) during the administration for the former Head of State of Nigeria, General Ibrahim Badamansi Babaginda in the year 1986 also liberalized banking business in Nigeria. Another reason for the increase in the number of banks was the widening of the sphere in which bank could operate. The general deregulations gave Banks free hands to carryout more business, and particularly the distinction between commercial and merchant banking became very thin, hence, the increase in number of banks.

Itself, is a positive development because, it helps in bringing banking to the knowledge of the people.

Some services provided by Nigeria Commercial Banks include the following:

1.       Collection and Payment Service: The safe keeping of valuables for people such as will, shares, and bonds certificates and other articles in sealed boxes as well as envelops.

2.       Depository Services: They receive deposit of any kind from customers and also making it available to them on demand.

3.       Provisions of specialized facilities such as funding trade transactions, trust services, and agency duties.

4.       Miscellaneous services such as business advisory services and credit management services.

5.       Collects proceed of bills of exchange drawn by their customers who are exporters or importers abroad and also discount bills of exchange from individuals and companies who may not want until the due date of such bills.

6.       Keeping to the laws, regulation, and guidelines governing banks in the course of providing services etc. Let us not forget that, the principal objectives of credit management include the assessment standing of the new and the already existing customers, developing terms having regards to the risks involved and the potentially profits, collection of accounts in such a manner and way that would produce the optimum cash flow, while the business continues to be a going concern. Moreover, it involves the protection of commercial bank investment in debtors.

It was therefore based on this background that the researcher wishes to ascertain and assess the problem of loan recovery in Nigeria Commercial Banks, using First Bank of Nigeria PLC, Ughelli Branch.

In organizing this empirical study, both primary and secondary data were used extensively. In primary data, the data that is used is through telephone, interviews, questionnaires, and observations; while the secondary data is through books, journals, magazines, annual report etc. The statistically tools that is being used in this empirical study is chi-square.


The core of the financial system in Nigeria is the Commercial banks. They have the potential to apply the full weight of their credit facilities for the development and growth of the country.

Credit is seen as the blood stream of business. It is the valued material that oils the wheel of development. The situation of the country today demands the injection of healthy banks credit, to effectively fasten the peace of growth.

Haggot Bank Harry (1984:17) wrote that the basic best of effective and efficient (well functioning) financial system is its ability to finance credit needs which will contribute to economic growth. Also, according to Bank of Japans publication (1973:165), commercial banks have contributed significantly to economic development.

The development of Japanese economy is largely due to the facts that, they were able to have adequate accommodation of capital.

In Japan, most of the funds being raised by business organization is being supplied by commercial banks; this is done through loan to customers (borrowing from banks).

This is not so in Nigeria because, the shareholders of the commercial banks are afraid. Ejiofor P.N (1981:265) opined that holders of the shares of the banks get much more worried about the rate of bad and doubtful debts in the banks financial book (statements). This is because the increase in bad and doubtful debt affects the rate of their dividend.

From the foregoing, the problem of loan recovery in Nigeria commercial banks is therefore a serious problem as this virus has led to premature liquidation of banks that were very healthy. Here, lies the reasons why this study is being embarked upon.


The objectives of this research study are summarized as follow:

a.                  To ascertain the institutional arrangement used (utilized) by First Bank of Nigeria PLC, Ughelli in the process of its loan recovery activities.

b.                 To discover the problems encountered with its customers.

c.                  To recommend some method that would be followed by the bank so as to enhance an efficient and effective loan recovery.


The study hereby supplies the following research questions that require answers:

a.                  Should First Bank PLC Ughelli continue to utilize its present loan recovery system?

b.                 Are the problems encountered by the Bank in its loan recovery system caused the Bank management staff?

c.                  Could a change of new measure assure a reduction of bad debts?

d.                 Is there a higher growth of risk in lending?

e.                  Has our present economic reality constituted a problem?


This research work is concerned with loan recovery in Nigeria Commercial Banks. It includes the Central Bank of Nigeria (CBN), Merchant and Development Banks as well as other financial institutions.

However, First Bank of Nigeria PLC, Ughelli Branch was focused upon.

This study however focused on the reviewed historical development of commercial banking in Nigeria. Various scholars view points and bad debts in banks are also discussed in details.

The study goes further to highlight the principle of good lending. Environment influences on commercial bank lending is one of the areas studied. Lending policy of the bank brings to light direction and use of funds from shareholders to highlight depositors and creditors.


There is a great gap between management theory and management practice in Nigeria. Ejiofor (1980), identify the theory gap as about the separation of the theories from the practitioners. Fortunately, this study draws from the experience of some of the practicing bankers. It is hoped that the research findings would be communicated in a way meaningful to the policy makers as well as future researchers.

Therefore, if the result does not explicitly solve the problems, it would have created a starting point for policy debates and future research in the field of Icon recovery.

Conclusively, it is envisaged that the research finding would:

a.                  Serves as a guide to the present and future investors in commercial banks not only in First Bank of Nigeria Ughelli branch.

b.                 Provides Bank management as well as policy with a starting point in re-appraising some of their loan policies.

c.                  Provides curious researchers and bank analyst with some index of bank loan analysis.

d.                 Draw the attention of regulatory authorities to the needs of standardized policy of accountability with regard to loan recovery and bad-debt provision.


The assumptions of the study are summarized as follows:

a.                  The researcher assumed that, there had been that problem of loan recovery in substantial number of Nigeria Banks such as First Bank PLC, Union Bank, Unity Bank PLC etc.

b.                 It is also assumed that, this problem of loan recovery has existed for quite some time now.

c.                  That the appropriate procedure, law, or guidelines for loan extension has been promulgated by the apex bank known as Central Bank of Nigeria (CBN).

d.                 Loans are being extended by Nigeria Commercial Banks and non banking public.

e.                  That the law provided that the defaulters of the loan being granted by the bank should be dealt with decisively.


LOAN: Is money that an organization such as a bank lends and borrows.

RECOVERY: The process of becoming well again after the illness or injury.

COMMERCIAL: The process of making or intending to make profit.

BANK: An establishment which deals in money receiving and on deposits; and giving back on demand. Also, it is a financial institution that accepts valuables like wills, deed, gold, diamond for safe custody and also performing intermediating role.

COMMERCIAL BANK: May be seen as a financial institution set up for keeping and lending money to people, owned by individuals, organizations, or government with the motive to make profit.

BAD DEBT: A debt is said to be bad when there is no hope of recovering it.  

BAD DEBT RECOVERY: It is a debt recovered which has been declared bad.

LENDING: Means giving out money to reliable and deserving customers to borrow.

LOAN BENEFITIARIES: It simply means the person whom the loan is borrowed.

CAPITALISED EXPENDITURE: They are expenses, which the bank incurred during the construction of office purchasing equipments.

GOOD DEBT: A debt is said to be good when there is every hope of recovering it.

CENTRAL BANK OF NIGERIA: It is the apex bank of all existing banks of a country. It has overall power over any other existing bank in the country. They control the commercial banks in different ways to see to the satisfaction and security of the public.

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