DEBIT RECOVERY TECHNIQUES IN THE BANKING SECTORS ISSUES: PROBLEMS AND PROSPECTS

ABSTRACT

When some banks in the system are distressed, it is in the best interest of the non distressed one that an effective resolution of the distressed it carried out . This is because, the distress in one bank which leads to a loss of confidence in the effected bank can also affected confidence in the entire banking system, the corporation requires enormous amount of money which it does not have at the moment given the age and size of the insurance find.Bank customers expect their bankers to provide them with loan and advances to make up the short fall in their required find the ability of the bank to maintain profitability depends largely on the extent to which the credit policy and debt recovery techniques is maintained. Credit control department is the center of banks and as such , they are charged with responsibility of making proper use of the share holders finds of the public at large . The union bank of Nigeria PLC has been chosen for this work.. The study is carried out to examine the debt recovery techniques employed by union bank of Nigeria PLC towards the effective running of the bank as lending attitude and preferring solution as deemed appropriate. The case study method was adopted in carrying out the work and debt were collected from secondary and primary source. Secondary sources information include the use of existing literary coupled with use of some journals and other unpublished manuals were seen to be useful for this work. Chapter one highlights one the statement of the researches problem, definition of some important terms used for the study, scope, limitation and hypothesis. Chapter two dealt with relate iterative. It focuses on conceptual and theoretical bed rock upon which bank recovery techniques is built  Chapter three and four dealt on data collection which includes questionnaire analysis, personal interview, analysis as well as testing hypothesis based on response to the questionnaire  Chapter five is the findings, conclusion and recommendation of the researcher

CHAPTER ONE

1.0 INTRODUCTION

Actually, for every successful business, there must be a debt in the sense that one person or customer must own the owner of a business. Banks are not exempted from this, this due to the activities involved in their operations. Debts can be accrued as a result of bank over draft, frond and forgeries, borrowing and so on therefore banks recover these debts through the rules and regulations guiding the institution. The lender will explore all the available sources of repayment of the debt. The process of recovery is the cove of the management of bad debt as it is quite an unfriendly exercise carried out by the bank against a default customers to forcefully retrieve the banks money, in recovery of debt, there must be consideration of the security position of the bank, borrowers , ability to pay bank the use of debt collections recover by legal preceding and so on. Debt recovery can be described as responsible for the effective and economic planning and regulation of operations of an enterprise in fulfillment of a given purpose or task. Failed bank recovery debt and financial malpractices defined debt recovery as a means of any loan, advances, credit, accommodation guarantees, or any other facility, together with the interest there on which outstanding and unpaid against a customers of a bank in favour of the bank. In recovery of debt from the borrower or customers banks do encounter problem between the customers for inability to pay. Besides, improper documentation, credit concentration, poor supervision of the funds can or may consequently make the bank to be unable to meet its obligation.

1.1  BACKGROUND TO THE STUDY

The importance of banking in economic system singles out the industry for much heavier regulations than any other. Unlike many other economic activities, banking industry involves with statutory activities that governs it practice and it is constituted by laws. The current distress in banking sector has been widely acknowledge arising primary form non performing loans which have been traced to a number of factors such as poor management, loan policy concentration of credit, credit information emphasizes on income growth and unsound judgment, found and forgeries e.t.c. Therefore, the federal government set up the Nigeria deposit insurance corporation (NDIC) to protect the customers which would have resulted to a problem towards their operation. The Nigeria deposit insurance corporation (NDIC) was establish by decree No 22 of 1988, the banking system has been singled out for this special protection because of the vital role bank play in an economy especially in the process of economic development. The federal government by decree No 18 of 1994 establishes failed bank (recovery of debt) and financial malpractice tribunal which has the power to recover debt owed to failed bank. Union Bank Plc formerly known as Barcklays bank was open in Lagos in 1917, the bank first office in Nigeria was located at the old mariner in Lagos other branches were opened in Jos and Port Harcourt. In 1925, the bank was renamed Barcklays Bank Domino colonial and oversees and it became Barcklays Bank colonial and oversees in 1954. In 1955, Barckey Bank Domino colonial and oversees was granted licenses in 1960, regional managers were appointed for the administration of the Eastern, Western and Northern Nigeria region. As a result of the development the bank was able to open over 50 additional branches between 1959 and 1970; in 1987 Union Bank of Nigeria has over 200 branches. In the period of 1979, the performance of the bank was impressive because about 2500 staff voluntary retired under the Union Bank model of early retirement incentive package. The total staff strength has gone done to 8911 from the 1997 figure of almost 12.00 The gross, earning has grown from N13.8 billion which showed an increase of 33% over the 10.4 billion in 1997 profit before and after tax increased from N14billion and N1.2billion in 1997 to N2.1billion and N1.7billion in September 1998 indicating an increase of 38% and 43% respectively. Total assets increased by 27% from N81billion in 1997 to N1200 billion in 1998 while total deposit stood at N77.2 billion in 1998 representing an increase of 30% over N59.3billion in 1997.

1.2  STATEMENT OF THE STUDY

Banking industry is one of the financial institution ever known the quality of service rendered by them have been attracting critisms from people in all works of life. The government functionaries, business men, the media and the general public are all very critical of banking services. The complaints range from those of inefficiency, favourism. Long delays in cashing cheques or making withdrawals, trimness in granting loans and or credits, unfriendly attitude of bank workers and the worst of them all is bankruptcy or liquidation of bank. Some people find it hard to believe that banks can keep money for their customers because they believe that someday the bank will liquidate and the money people suffered to make for some years will be done just like that. Are these criticisms justified or are they just a mere rundown of baking industry because they are making profit in an era of economic slump.

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