Agricultural loan disbursement and repayment in nigeria commercial banks

Thesis Overview

<p> </p><p><strong>INTRODUCTION</strong></p><p><strong>1.1) &nbsp; &nbsp; BACKGROUND OF THE STUDY</strong></p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>A commercial bank can be defined as a financial institution or company<br>carrying on the biz of receiving monies other valuables as deposits from<br>the public for keeping and for lending to the investors on short and<br>medium term basis on which it charges interest such deposit or repayable<br>on demand to the depositors or order. ADEKANYA(1993)</p><p>&nbsp; &nbsp; &nbsp; The<br>early commercial bank in Nigeria were established by the colonial Govt<br>and mainly catering for the interest of the expatriates, thus [i]financing<br>export trade and neglecting agricultural financing. The discriminatory<br>attitude makes some Nigeria to establishing indigenous commercial banks<br>could be found in the country which include union bank plc, first bank<br>plc, universal trust bank limited and afribank plc.These institutions<br>perform such services which include the acceptance of deposits in form<br>of cash or cheque &nbsp; from the public granting of loans and overdraft<br>faculties to customers, issuance of letters credit to worthy customers<br>and fund transfer service discounting of bills. <br>Etc. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Despite the amount of loan being channeled to the<br>agricultural sector for industrial development by commercial banks, the<br>agricultural sector still suffers from some in he rent problems<br>militating against the industrial and agricultural of the nations. And <br>there has been continuous shortage of basic food items in the nation as a<br>result of lack of agricultural development.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>The prices of food items are always develop as result of limited yearly<br>output of agricultural products. A huge sums of foreign exchange is<br>spent annually on the important of &nbsp; raw materials for local industries<br>which would have been source locally, if the agricultural sector was<br>full developed. Also farmers and other agro-base ventures are not<br>motivated towards obtain agricultural loan facilities due to the banks<br>stringent measure of loan appraised, disbursement &amp;re-payment.</p><p>&nbsp; &nbsp; &nbsp;<br>Finally, a lot of foreign exchange earnings which would have been<br>earned through commodity exports as a result of improved agricultural<br>product could not be achieved due to the under development of the<br>agricultural sector GREENER (1990). This study will therefore focus<br>attention agricultural loan disbursement and repayment in Nigerian<br>commercial banks in the there to look the factors that militate against<br>the proper disbursement and repayment of such loan in other to<br>revitalize the agricultural sector so as to be self sufficient in food<br>production and for the economic development of the nation.</p><p><strong>1.2 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</strong><strong>STATEMENT OF THE PROBLEM</strong></p><p>The commercial banks, farmers and other agro based</p><p>industrials are faced with problem arising from the disbursement and payment of agricultural loans</p><p>&nbsp; &nbsp; &nbsp; <br>There is a problem of insufficiency of liquidityawardable to the<br>commercial banks to meet loan applications by prospective customers or<br>farmers due to Govt policies on reserve requirement of commercial banks.<br>The customers and farmers irritability in repaying the loan give to<br>them also militate against the willingness of banks in agriculture<br>loans. Sometime the security to be offered by customers for such loans<br>become a problem as some customer found it difficult to offer a<br>collateral security for such loans which even tonality deprive them from<br>obtaining agricultural loans Furness (1991).</p><p>&nbsp; &nbsp; &nbsp; Most farmers<br>and other agro-based ventures customers deviate from investing the<br>proceeds of the loan on agricultural ventures for which purpose such<br>loans was extended during a period of cash sequence in the economy<br>commercial banks often finds it difficult to extend agricultural loans<br>to credit worth customers due to scarcity of liquidity. These and other<br>problems, the research intend to investing in this study.</p><p><strong>1.3 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</strong><strong>OBJECTIVESS OF THE STUDY</strong></p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>The purpose of this study can be over emphasized because of the<br>increasingly shortage of food items, poor and inadequate implements<br>being used by farmers and other agro-based industries and the inability<br>of the commercial banks is extending facilities to customers due to<br>repayment, security and other problem being encountered by bank.</p><p>&nbsp; &nbsp; &nbsp;<br>The researcher is of the opinion that corrective measure to taken<br>overcome these predicaments therefore the objectives of the study are:</p><p>1.To identify the various criteria for obtaining agricultural loan towards the development of agricultural.</p><p>2. To identify whether the agricultural credit policy of the government is being adhered to by both the customers and banks.</p><p>3.To<br>check the repayment capabilities of customers so as to ensure prompt<br>repayment of approved facilities including interest charges.</p><p>4.To motivate farmers and corporate customers in souring agricultural loan for expansion of their agricultural project.</p><p>5.To<br>encourage mechanized farming as a result of such facilities which could<br>be used for the procurement of tractors and other farming input.</p><p><strong>1.4 &nbsp; &nbsp; &nbsp; &nbsp;</strong><strong>SIGNIFICANCE OF THE STUDY</strong></p><p>&nbsp; &nbsp; &nbsp; &nbsp; <br>&nbsp; &nbsp; The study of this, is to emphasize on the increasing shortage of<br>food items, poor and inductor implements being used by farmers and the<br>inability of the commercial banks in extending facilities to their<br>customers due to repayment security and other problems being encountered<br>by bank.</p> <br><p></p>