Design and Implementation of Loan Scheme Management System

Design and Implementation of Loan Scheme Management System

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ABSTRACT
This work borders on loan scheme management system. The current system of loan scheme management system is faced with few technical issues, ranging from Time wasting in granting of loan to customers. This calls for the need to develop a system that corrects this error. The design loan scheme management system Enable the Credit officer grant loan effectively. The present system Keep proper records of Loan Portfolio. The methodology adopted for this project is the Structured System Analysis and Design Methodology (SSADM). The new system Generate monthly Interest on Loan and Advances, The computerized bank loan management system enables bankers to work without stress.

CHAPTER ONE
INTRODUCTION

1.1  BACKGROUND OF THE STUDY
Banks being a financial institution, is engaged in the acceptance of deposit of money, granting of credit (by means of loan, overdraft) and other transactions such as the discount of bills, foreign exchange etc.
 Loans being one of the transactions being done in the bank are a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially does receive an amount of money from the lender, which he has to pay back, usually but not always in regular installments to the lender. This service is generally provided at a cost referred to as interest on the debt. A loan is of the annuity type if the amount paid periodically (for paying off and interest together) is fixed.

Since computer in business has risen above the detailed clerical automation, to providing decision-making assistance at a highest level of management. The ability of computer to store, retrieve and analyze data at tremendous speed at low cost has made it imperative for large corporation and industry to depend on its accuracy and efficiency in its operation, with the environment at fast pace, viewing this development as an opportunity to increase their influence and control the data processing of the organization. Business carried out in some organization is now totally dependent on the accurate operations of computers. The banking industry is no exception to the capabilities the computer provides especially in the area of loan and advances, which in no small measures contribute to the financing of individuals and business and to enhance economic development.

Loan service for small organizations individuals was initiated after a number of considerations on the banking system.  Major Banks are mainly guided by financial profit for their shareholders.  They are after minimization of financial risks.  Such strategies don’t leave much room to people on low income or even small organizations that strive for their survival.
This research studied the computer-based loan scheme management system-as was done in Unical Micro-Finance Bank Ltd.  Loans are readily given to people who have an account (mostly current Account) in the Unical Micro-Finance Bank.  Apart from being a customer to the necessary for giving him loan.  Such conditions may include: provision of collateral security, having at lest one guarantor and filling the bank loan management form.  The collateral security must be a landed property before the bank will accept it.  Also, the guarantor must have an account in that bank and must be a reportable person in the society.The role of computer in loan scheme management can never be overemphasized.  The computerized bank loan management form enables bankers to work without stress. 
A bank can be defined as a financial institution that engages in acceptance of deposit of money, granting of credits (loans, overdraft, etc) and other transaction such as discounting of bills, foreign exchange etc. one of the basic functions of a bank is to issue out loans to competing users. There are two types of loans that are being issued out to customers; they are secured loans and unsecured loans.
•         Secured loans-: are loans backed by a pledge of some specific valuable items, known as collateral, which can be seized by the lender should the borrower fail to repay the loan.
•         Unsecured loans:-are loans that require no collateral, or security. In this type of loan, the bank relies on the general credit record and the earning power of the borrower. To increase their returns on such loans, as well as to obtain some protection in case of default most banks insist that the borrower maintain some minimum amount of money at the bank while the loan is outstanding. Such a deposit is called a compensating balance, meaning that while a borrower pays interest on the full amount of a loan, a substantial portion of that loan is kept on deposit in the bank.

1.2    STATEMENT OF THE PROBLEM
The existing loan scheme management system of unical micro finance bank has the following draw backs:-
  1. Time wasting in granting of loan to customers.
  2. Customers Information are kept on Ledgers which may be eaten up by insects.
  3. Improper calculation of monthly interest on loan account.
1.3    OBJECTIVES OF THE STUDY
The objective of this study is to develop a software that will:-
  1. Enable the Credit officer grant loan effectively.
  2. Keep proper records of Loan Portfolio.
  3. Generate monthly Interest on Loan and Advances

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