Title Page---------

Approval Page--------





Table of Contents-------


1.1Background of the Study-----

1.2Statement of General Problem----

1.3Objective of the Study------

1.4Research Questions------

1.5Significance of the Study-----

1.6Scope of the Study------

1.7Definition of Terms------


2.1 Introduction - - - - - - - - -

2.2 Structure of banking - - - - - - - -

2.3 Role of banking in general economic development - -

2.4 Policies and characteristic of good policy - - - -

2.5 Procedure for taking securities for bank lending - - -



3.2Research Design------

3.3Population of Study------

3.4Sample size and Sampling Techniques---

3.5Method of Data Collection-----

3.6 Research Instrument

3.7Validity of the Instrument-----

3.8Reliability of the Instrument----

3.9Sampling Method------



4.2Data Presentation and Analysis----

4.3Testing Hypothesis------





References --------

Appendix - - - - - - - -



A bank could be described as a major financial institution that includes finance houses, insurance companies mortgage companies, etc. the main function of this financial institution is to provide financial support to those who are in need. Apart from this function, banks perform other functions like rendering advice and counseling, acceptance of deposits, provision of loans and advances and also providing a safekeeping place for people's variables.

Many banks play intermediary roles in the financial sector.

v Moderation of the rate of inflation

v Reduction of pressures on the eternal sector so as to achieve a sustainable balance of payment position

v Establishing the naira exchange rate in Nigeria

Banks could be classified into the following categories

v Central bank

v Commercial bank

v Merchant bank

v Development bank

v Community bank

Obviously, with an observer first contract with a developing economy, all these categories of bank play important role in stimulating the economy, they deal with members of the public, first, they all provide first information and investment advice to willing customers. Community banks for instance were established primarily to spread banking service to the grassroots; considering the act that a greater percentage of the countries population reside in the rural area.

          Development bank by implication tends to carry out their function effectively because they diversity into specialized areas, such as agriculture and industry, an example is the Nigeria agricultural and commercial bank (NACB) and Nigerian industrial development bank (NIDB0 hence the development of the economy is stimulated through these agency function.

          In order to achieve their set out objective, all these banks rely on certain instruments and policies which include reserve requirements, stabilization of securities, interest rate policy (lending policy) exchange rate, and foreign exchange management. Discount rate policy among others which Nigeria developing country is put in place and overseen by the government-owned central bank.

          Lending has over the years become one of the most important functions in baking operation. It provides money for investment which in turn yields turnover and increases the liquidity in circulation. Due to this direct effect, it has no the economy and business development, it is being pursued in many developing countries where bank and their lending activities have been usefully integrated into government policy formulation in the national economic development process.

          In Nigeria for example where the majority of the population is in abject poverty, funds are very difficult to come by for investment purposes.

Lending is giving something to someone else for use over a short period of time (in this case money with interest when being paid back). in the objectives of lending activity, the banks in the country have come up with policy guidelines that basically provide the framework for dealing with loans and advances.

Some of these policies are designed to have relevance to the internal constraints of each bank for instance sector performance, deposit base risk existing exposure while the others are derived mainly from the guidelines issued.

          A lending policy if properly articulated could provide a guide for safe, sound, and profitable banking activities, if on the other hand the lending policy is not properly formulated it could lead to bank liquidation.

          Irrespective of the amount of liquidity available in a bank it may find it practically impossible to satisfy all the requests it gets for loans since the requests may outstrip available resources. The bank thus has to decimate in the decision to lend. Funds available for loans must be judiciously applied strictly along with the bank policy.

          Lending procedures that act as checks toward making sure that the objective of policy guidelines are achieved include

v How loans are to be processed

v What document is required

v Necessary securities

v Where various document should be sent

v Recommendation to be forwarded etc

          Due to improper lending, most banks make provisions for bad debts but on the other hand what is known as recovery procedures in savoring doubtful debts. They include the step-by-step action by its specialized units either legal or otherwise to this effect.

          In summary, this intends to take a critical appraisal at these lending policies and procedures for loan recovery these policies and procedure play important roles in achieving a good and effective banking system.


The purpose of having guidelines and policies on lending and recovery procedure in banks is to achieve a certain objective of economic growth and development. Normally, if these policies are not strictly followed, is expected that some effects will be felt on the economy.

Bad debt and its management are among the major problem encountered by banks in their lending and recovery operations.

Non – adherence to the established guidelines and policies on lending and recovery procedures on lending and recovery procedures in banks makes it more difficult for the banks to overcome the problem of bad debts.

1.3            OBJECTIVE OF STUDY

This study aims at evaluating the effectiveness of commercial bank's credit policies and guidelines as directed by the central bank of Nigeria. This study also determines the extent to which these policies and guidelines help commercial banks in stimulating economic growth and development


The study will be of help to loan administration and those who work in areas of credit assessment and control in the various commercial bank – also it is hoped that this study will be of immense help to the banking institution particularly the school library and future product researcher




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