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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Generally in Nigeria, banks are usually accused by customer’s of number of short comings, which are regarded as problems and failure in banking system. These include lack of awareness by customers of the services they offer subjecting the customers to long queues unsympathetic staff in terms of courtesy and efficiency, intricals and unprogressive lending policies and procedures irregular issue of statement etc, all these result in low level of customer satisfaction.  At moment, Nigeria is fast attempting to transform into a modern industrial society whether this attempt will be achieved or not is still questionable. The urban area having now high population densihes from rural, which are supposed to be the sources of raw materials for the industries. Hence the achievement of industrial objective rest squarely on the shoulders of the banks. Banks could help Nigeria reframe herself and produce raw materials for her mills and not solely depend on imported ones. This could be done by diversifying the source of income from the present mono (based solely on petroleum revenue) to that of (diversified one).
The banks role in attaining the above objective ultimately, specially and efficiently is very crucial. Having experienced the strain, intricale and procedures of obtaining banks loanable fund that researcher mind was directed to the questions as to what participates such stumbling blocks in our banking system. It is the blame on the banks, the customer and the government for not appreciating the place of credit in our society for instance, the banks by the nature of their business exercise a high degree of economic power. To them belong to the naira power which is the lubricate/accelerator of our economy.
They have the prerogative in the choice of assets (businesses) they place their disposable portion of funds deposited with them by customers. Though they know and have experienced the positive results of attempt in the effective provision and use of credit, the banks have been rather very skeptical in exercise this their power not  withstanding the central bank of Nigeria issues annual directives to licensed banks allocating prescribing quantitative ceiling as well as sectorial allocation of their loans and advances to the economy through the monetary policy circulars conveying the central banks, credit guidelines. However, it has come to be realized that these are certain problems associated with he present lending schemes which must be highlighted and solved by the customers, the banks and   government in providing loanable fund so that more benefit would be taped from this usage. Hence, the motives behind the caring out of this research study.    
1.2    STATEMENT OF PROBLEMS
There is hardly any approach to obtaining bank loans/credits that is devoid of problems. This project thus sets out to identify the lending problem of bank and customer in Kaduna and its environments.
-              High rate of interest/charge
-              Banks lend on short term basis cannot accommodate medium and long term borrowers.
-              High rate of default
-              Difficulty in banks policy/central bank policies
-              Lack of security to back-up the lending
-              Customers request are not well packaged.  
1.3      OBJECTIVES OF THIS STUDY
Specifically, there are some factors outside management control such as the Central Bank credit guideline (rule and regulation), policies and the value of managers implementing bank policies, which influence in one way or the other on the lending decisions and outcomes for the bank. The aim and objectives of this research include:
i.        How can we reduce the high rate of interest charge bank.
ii.       How can customer be educated on how to package their request correctly.
iii.      How possible it is to evaluate the lending difficult policy of both bank/central bank  
1.4    RESEARCH QUESTION
Ho:   To what extent will judicious utilization of loan lead to effective management control.
Hi:    To what extent will judicious utilization of loan not lead to effective management control
Ho:   Will assessment of loan management and accountability serve as an aid to increase the capability of Nigeria banks?
Hi:    Assessment of loan management and accountability will not serve as an aid to increase the capability of Nigeria Banks?
1.5    SIGNIFICANCE OF STUDY
After identification of certain problems, on this research work recommendation will be made for solution, considering their specific cause and nature. Such recommendation and findings hopefully will be useful to management of banks in the countries who have similar problems to the banks studies. It is also hoped that such recommendations will be of use to potential borrowers from the bank, banking and accountancy student in the higher school of learning, and to the numerous private management consultancy firms throughout Nigeria.  
1.6      SCOPE OF THE STUDY
The scope of the study is on commercial banks in Nigeria or banking sector as a whole but using Union Bank Nigeria Plc Kaduna as a case study.

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