CREDIT MANAGEMENT IN NIGERIA BANKS
CREDIT MANGEMENT IN NIGERIA BANKS:
AJUGWE CHUKWU ALPHONSUS
INTRODUCTIONS
Credit Management is one the most difficult task facing bankers all of over the world and the case is more pronounced in the Nigeria situation because going through the history of banking in Nigeria, one can observed that the major source of bank failures was ineffective credit management that led to accumulation of bad debts. Credit administration is the bane of Nigeria banks and a major source of worry to Regulatory Authorities. The Prudential guideline issued by Central Bank of Nigeria defined Credit as the aggregate of all loans ,advances, overdraft, commercial paper, bankers’ acceptances, bills, discounted, leases, guarantees, and other loss contingences connected with a bank’s credit risk. However, Mandel (1974) noted that credit is the right of lender to receive money in the future for his obligation to transfer the use of funds to another party in the interim.
Credit management is the strategy applied by the management of the banks to plan, control and monitor loans and advances given to their customers to prevent such loans from crystallizing into none performing loans or bad debts. The main aim of credit management is to ensure that the bank realizes its investment in the granting of loans and stimulate constant flow of income from the advances. Coyle Brain (2000) opined that the main fact is that credit management is concerned primary with managing debtors and financing debts. He went further to state that in the organization and the control of credit activities Management should ensure that responsibility for credit management are allocated efficiently, operating systems are in place and credit control staff are of suitable quality and properly trained and motivated. Another observation, credit management should be taken seriously, is that, one of the key service deliveries by the banks in Nigeria is loan administration and a major source of their revenue and profit. Also a
AJUGWE CHUKWU ALPHONSUS
INTRODUCTIONS
Credit Management is one the most difficult task facing bankers all of over the world and the case is more pronounced in the Nigeria situation because going through the history of banking in Nigeria, one can observed that the major source of bank failures was ineffective credit management that led to accumulation of bad debts. Credit administration is the bane of Nigeria banks and a major source of worry to Regulatory Authorities. The Prudential guideline issued by Central Bank of Nigeria defined Credit as the aggregate of all loans ,advances, overdraft, commercial paper, bankers’ acceptances, bills, discounted, leases, guarantees, and other loss contingences connected with a bank’s credit risk. However, Mandel (1974) noted that credit is the right of lender to receive money in the future for his obligation to transfer the use of funds to another party in the interim.
Credit management is the strategy applied by the management of the banks to plan, control and monitor loans and advances given to their customers to prevent such loans from crystallizing into none performing loans or bad debts. The main aim of credit management is to ensure that the bank realizes its investment in the granting of loans and stimulate constant flow of income from the advances. Coyle Brain (2000) opined that the main fact is that credit management is concerned primary with managing debtors and financing debts. He went further to state that in the organization and the control of credit activities Management should ensure that responsibility for credit management are allocated efficiently, operating systems are in place and credit control staff are of suitable quality and properly trained and motivated. Another observation, credit management should be taken seriously, is that, one of the key service deliveries by the banks in Nigeria is loan administration and a major source of their revenue and profit. Also a
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