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THE UNIQUENESS AND IMPACT OF COMMERCIAL BANK LENDING ON THE GROWTH OF SMALL-SCALE INDUSTRIES

ABSTRACT

This work desires because of the need to know the importance of impact of Commercial Bank lending to small-scale industries both internal and external. The chapters one of this works lead us to the introduction of this work, the definition of small—scale and its instruments. They role the play and the Commercial lending securities. The chapter two led us to the definitions of the term used by small-scale industries in borrowing from the Commercial Banks The chapter three talks about the techniques use small scale industries and how the techniques are being carried out. The chapter four of this topic is talking about the presentation and analyzing of data i.e. (how small-scale industries are presented in the society and how people react to it whether positive or negative while the chapter five is all about summary, conclusion and recommendations.

CHAPTER ONE

INTRODUCTION

BACKGROUND OF STUDY

From observation, I have come to the understanding of one general thing in mind set of people (i.e.) whenever the word “small” is mention, the minds of people race to something or a picture not big, less important, not up to standard in nature. This is the same in business, once small scale industry is being mention; people looked down on it, yet forget to understand that every big thing starts small.

However, studies of modern economics have shown that it is difficult to maintain a balance and sustainable economic growth by depending only on large business organization. Small and large businesses are known to contribute significantly in building a solid and vital economic base in both developed and developing countries. Over the years, studies of management have often concentrated on large organization with strict formed and impersonal relationship. The reason for this obviously includes the high prevalent risk resulting from huge capital investment and large-scale operation. In Nigeria, the term small-scale business has got several definitions. The reason is that different countries are at different level of developrnient, operating within different economic conditions.
According to bank of Commerce and Industry (NBC), small-scale business is a firm whose assets does not exceed N750,000.OO, while Central Bank of Nigeria defines small-scale enterprise as a firm whose assets does not exceed N 25 Million annually.
Therefore, we will examine the uniqueness and the level of Commercial Bank credit to small-scale industries, and then find out how adequate this credit has been in solving the financial problems of small-scale industries.

Osubor and Okafor (2006) a Commercial Bank may be defined as a financial institution which deals in money and credit and which some of which are repayable on demand by cheques. Commercial Banks are limited habitability companies established for profit as owned by shareholders. Commercial banks are the nations most important financial institution. They are unique on the performance of service and are distinguished.
Due to the type of economic we find ourselves, the kind of leadership we have and lack of trust among each other, Commercial Banks are now known for their restrictive credit policy. This policy has made it rather impossible f -al ca1 industrial foobiajn kins, which they require Tor their expansion and growth of their business and economy. In a situation where loans are approved, the problem may either be that the amount is not adequate or that the time of disbursement of loan is not consistent with the time the loan is needed.
Commercial Bank lending on small-scale industries have not been adequately faced. This is because of their high interest rate on bank loans, their requirement for collateral security and their understanding towards small-scale business.
1.2 STATEMENT OF PROBLEMS
Just as human being are face with challenges every day, likewise business and organizations will attempts of modernization of many primary industries1 standard of operation have moved into the capital intensive stage for new industries to be able to go into operation they need reasonable capital. There comes the Commercial Bank.
The application of Commercial Banks lending policies has denied the small-scale industries the opportunity of using bank facilities for their growth. These problems hindered the development of small-scale business in Nigeria they include:
The willingness of Commercial Banks in lending to the small-scale business.
Lack of trust in small-scale business owners.
> The inadequate assets base for securing loan and advances from banks.

1.3 OBJECTIVES OF THE STUDY
Due to the type of economic we find ourselves, the kind of leadership we have and lack of trust among each other, Commercial Banks are now known for their restrictive credit policy. This policy has made it rather Impossible for small-scale Industry to obtain loans, which they require for their expansion and growth of their business and economy. In a situation where loans are approved, the problem may either be that the amount Is not adequate or that the time of disbursement of loan is not consistent with the time the loan is needed. Therefore, the reason of this work Is to find out:
To which level of Commercial Bank credit to small- scale industries.
To the adequacy or inadequacy of Commercial Banks credit to small-scale industries. To which extent is the Commercial Bank credit to small-scale Industries. To offer solution and recommendation where necessary.

1.4 RESEARCH QUESTIONS
– What are the main thing that brought about the uniqueness of the Commercial Bank? i.e. the Impact of lending to small business.
– What role can we say, the Commercial Bank has played In the growth of small-scale industries? ) Is there any differently encountered by small-scale business in obtaining loans from Commercial Bank?
– Development of this small-scale Industry, are they playing any role in the growth of the economy.
1.5 SIGNIFICANCE OF THE STUDY
The objectives of the study include:
– EMPLOYMENT GENERATION: Small business, provide self employment to majority of people in our society. Thus, enabling them to become earners and responsible members of the society.
– ENTERPRENEURSHIP DEVELOPMENT: Small- scale businesses provide the training ground for businessmen. Experience and skill development Is running successful small business could be gainfully employed on large scale industry set ups.
– INDUSTRIALIZATION OF RURAL AREAS: Small- scale Industries located on rural areas provides, the base of industrialization. Because of low level of infrastructural facility requirements small-scale industries survive easily In rural areas.
– LESS FOREING EXCHANGE REQUIREMENT: Small-scale business requires less or no foreign exchange. Most of their equipment are locally fabricated.
– RELATIVELY LOW CAPITAL OUTLAY: small businesses do not require huge capital outlay comparatively. At the same time they provide quick payback. They also provide a degree of flexibility as they can easily adapt to changing in economic conditions.
1.6 SCOPE OF STUDY
The study will cover the activities of Lagans Venture, mind the glass and Commercial Banks. This is necessary for the purpose of conveniences in cost and information getting and time factors. The above Organization are located at No. 3 Ekerinah St. Aba and 186 Azikiwe Road Aba respectively.
1.7 LIMITATION OF THE STUDY
For efficient and effectiveness of the research work there are normally some limitations on the work.
COST: Also, due to high cost in everything cost becomes one of t him limitation of the study.
1.8 DEFINITION OF TERMS
BANKING LENDING: This Is a system by which Commercial Banks and other financial institution extend credit facilities to their customers for the purpose of business transaction, expansion and growth.
BANK LOAN: This is a fixed amount lent by a bank to a customer on an agreed time on specific terms.
BANK UNIQUENESS: This Is what differentiates Commercial Bank from other Institution and that Is the ability to work with every other field with out discrimination.
COLLATERIAL SECURITY: These include an asset deposited with a bank as a replacement in case of default from the customer.
SMALL-SCALE INDUSTRY: In the 1991 credit guideline (Monetary Policy Circular No 25), the Central Bank of Nigeria states that small enterprise for merchant and Commercial Bank loans is defined as one whose capital investment does not exceed N5 Million (excluding land arid working capital) or whose turnover is not more than (N 25 MillIon annually).

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