It is well known phenomenon that some business men that have sound business acumen and entrepreneurial ability do not have the financial resources to carry on their business activities and one avenue open to them for such financial assistance is commercial banks. It is for such persons this work is meant to serve their interest and to brighten their preparedness and responsibility to a request of loan. In an attempt to appraise the difficulties that are faced by the businessmen and commercial banks in borrowing and lending of funds for the business activities, this work have been divided into five chapters. The work contains the various problems encountered by the businessmen in obtaining loans and also the various ways or methods the bank would consider before granting of such loans to customers. It is also dealt with the review of the various theories in lending conditions and policies set by Central Bank of Nigeria (C.B.N) in its monetary policies of commercial Banks. The criteria for lending by commercial banks are problem of effective lending services and finally the incidence of bad debts in bank lending. The work also examined procedure adopted in obtaining information and data and the limitation of methodology. Questionnaire and interview analysis were also carried out in which the final analyses were recorded.

The study is based on the premise of finding out the necessary conditions with questionnaire and personal interview conducted on the lending activities of the banks, it was discovered that sufficient credit facilities which would as well stimulate business and entrepreneur skills are not being enjoyed by the bank customers. It was also discovered the purpose for which they are meant for. Recommendations are also made which might help to alleviate whatever problems that is there in the lending process. These recommendation were made in an attempt to minimize or totally erase the problems highlighted in the study during the whole process of lending. It is hoped that the result of the study will stimulate interest not only among business men, lending officers, researchers and student of financial management but also among policy makers in the banking industry.

TITLEPAGE – – – – – – – – – i
CERTIFICATION – – – – – – – – ii
DEDICATION – – – – – – – – – iii
ACKNOWLEDGEMENT – – – – – – – iv
ABSTRACT – – – – – – – – – vi
TABLE OF CONTENT – – – – – – – ix
1.0 INTRODUCTION- – – – – – – – – 1
1.1 Background of Study- – – – – – – 1
1.2 Statement of Research Problem – – – – – 2
1.3 Objective of the Study – – – – – – – 3
1.4 Scope of Study – – – – – – – – – 4
1.5 Significance of Study – – – – – – 5
1.6 Research Methodology – – – – – – 5
1.8 Limitation of Study – – – – – – – – 6
1.9 Definition of Terms – – – – – – – 7
2.0 LITERATURE REVIEW – – – – – – 11
2.1 Preamble – – – – – – – – – 11
2.2 Historical Development of Commercial Bank in Nigeria – – 11
2.3 Origin of Bank Lending – – – – – – 12
2.4. General Lending Policies by Central Bank of Nigeria – – 12
2.5 Criteria for Lending by the Commercial Banks – – – 14
2.6 Problems of Bank Lending in Commercial Bank- – – 16
CHAPTER THREE -Research Methodology
3.0 Introduction – – – – – – – – 19
3.1 Data Collection Method – – – – – – 19
3.2 Sample and Sampling Techniques – – – – 19
3.3 Description of Data Collection Instrument- – – – 20
3.4 Data Collection Instrument – – – – – – 20
3.5 Selected Research Question – – – – – 21
4.0 Data Presentation and Analysis – – – – – 22
4.2 Questionnaire Analysis – – – – – – 22

5.1 Summary of Findings – – – – – – 33
5.2 Conclusion – – – – – – – 33
5.3 Recommendation – – – – – – – 34
References – – – – – – – – 36
Appendix – – – – – – – – 37



1.1 Background of the Study

A businessmen undergoes the struggle difficulties and procedures of obtaining loans and advances, the researchers are faced with the question as to what the cause of such obstacles in the banking system are: the people involved and what is to be done in order to resolve or eliminate the problem.
The causes of these problems could be traced to the bank’s customers and the government for failure to appreciate the place of credit in the Nigeria economy. Bank loans and advances form the major sources of revenue to bank, as such, they form the most significant source of profit to banks. Although the banks would want to lend money as much as possible to their customers but due to some constraints. They are usually not able to meet all the demand for credit in the economy all such obstacles which come the way of borrowing and commercial banks in borrowing process constitute problems which need to be highlighted. They will make for avoidance of deliberate falsification of data and necessary requirement backed with insufficient reason with the aim of getting credit facilities with commercial banks.
Most customers are unaware of the services, which the bank offers. In most cases, customers are being subjected to long queues while others are frustrated by unsympathetic staff in terms of courtesy and efficiency. But before loans are given there should be collateral security and other condition to be fulfilled. Due to the fact that banks transform the deposit taken into loan advancement they learn to encourage more customers to open accounts with them so as to increase their deposit with them. Invariably their loan advances available for investment by other customers and their profit. It is not all businessmen that have entrepreneurial ability that have the financial resources to carry on their business activities. Hence, there is the need to borrow money to finance their business and one avenue which is open to them for financial assistance, is the commercial banks. Lending at times, some commercial banks are unable to meet the demand for such loans and advances, which are needed by their customers.
These problems of several reported cases of frauds and mis-arrangement of funds by top official of corporate bodies. This is one of the reasons why had difficulties in operations before it was taken over by Central Bank of Nigeria, Adekanye (2006), fund is one of the most important resources in carrying on business activities especially in a capitalist system of government like that of Nigeria.
Nigeria as we are aware, is trying to transform into a modern industrial society. The achievement of this is still questionable. Bearing in mind that the achievement of industrial objectives rest equally on the shoulders of the commercial banks, the writer have therefore decided to review the bank lending policies which are essential and necessary for posturing the economic development of Delta State in particular and Nigeria in general.

Statement of Research Problems

It is very difficult to find any process of obtaining bank loan and advances that are not problem prone. This project therefore, help in the identification of the lending problems of banks and customers, taking First Bank of Nigeria Plc, Market Road, Ughelli as a case study.
The study therefore should be able to provide answers to the following questions:
(a) What are the problems?
(b) Are the problems encountered as a result of non- availability of loan able fund?
(c) Are the causes of the problems as a result of customers’ lack of awareness of services, which the banks provide?
(d) Is it as a result of the attitude of bank workers towards their customers?
(e) Could the problems be attributed to the lending policies of the banks?
(f) How are commercial banks implementing the policy guideline issued by the Central Bank of Nigeria in their lending functions?
(g) How is First Bank of Nigeria PLC; recovering the loan granted their customers or how is the ability of the borrowers to pay back loans granted them.
(h) What steps have been taken by First Bank of Nigeria PLc in the past 3 -5 years to control its bad debts?
(i) What then is to be done in order to reduce the problem to their barest minimum or totally eliminate them?

1.3 Objective of the Study

Banks are business establishment, which safeguards money and basically provide loans. Taking into consideration the intricacies and procedures of bank lending, it become imperative for this study to be carried out so as:
(a) To highlight certain problems associated with the present lending schemes thereby enabling benefit to be derived from their usage.
(b) To identify the criteria for bank lending and bring into focus the problems associated with the loan and advances granted by commercial banks to their customers.
(c) To suggest best possible methods of increasing bank lending to customers and efficiency of recovering the loan in commercial banks.
(d) To examine the action which commercial banks take in order to check the incidence of bad debts.
(e) To see if the policy guideline set up by the Central Bank of Nigeria for the commercial banks to follow in their lending functions are used effectively.