Project Abstract

Abstract
The management of bad debt in the Nigeria banking system is a crucial aspect of ensuring the stability and efficiency of the financial sector. This research project aims to explore the scopes and remedies for dealing with bad debt in Nigerian banks. Bad debt, often referred to as non-performing loans (NPLs), poses a significant threat to the financial health of banks and can have far-reaching consequences for the overall economy. The research will employ a mixed-method approach, combining both qualitative and quantitative data collection methods to provide a comprehensive analysis of the problem of bad debt in Nigerian banks. The study will involve a review of relevant literature on bad debt management practices, as well as an examination of the regulatory framework governing the banking sector in Nigeria. One of the key scopes of the research will be to identify the root causes of bad debt in Nigerian banks, including factors such as poor credit risk assessment, weak corporate governance practices, and economic downturns. By understanding the underlying causes of bad debt, banks can implement targeted strategies to prevent the accumulation of non-performing loans in the future. In terms of remedies, the research will explore best practices for managing and resolving bad debt in Nigerian banks. This will include an analysis of debt recovery mechanisms, restructuring and workout options, as well as the role of credit risk management in mitigating the impact of bad debt on bank balance sheets. The findings of this research project are expected to provide valuable insights for policymakers, regulators, and banking professionals in Nigeria on how to effectively manage bad debt in the banking system. By implementing the recommended remedies and strategies, banks can improve their risk management practices, enhance their financial performance, and contribute to the overall stability of the Nigerian financial sector.

Project Overview

INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Banks have been credited generally with enviable role of being a very important source of funds or capital for the development of the economy. This recognition largely emanates from the roles assumed by most banking institutions in mobilizing various deposits and channeling some towards feasible and viable ventures. This size, type and level of such profitable outlet along with other complimentary factors contribute to economy well being of the country in which the bank is situated. As a result of this, banking institutions have been an agent of economic growth and perhaps economic development.

This deposit which are loanable funds can only be made available to banks, if customer make substantial deposit which banks in turn employ to make loan and advance available to borrower so as to generate interest which may accrue from the advances. This enables the bank to run its day-to-day administrative cost, remain in business and pay satisfactory divided to its shareholders.

1.2 STATEMENT OF PROBLEMS:
It is unfortunate that the borrowers take undue advantage of these loan and advances granted to them by not utilizing them for the purpose for which were given hence bringing about default in the repayment of such loans and subsequent bad debts. So, bad debt can be defined as unrecoverable debts. The borrower consistent inconsistency in response to demand for the repayment of loan and make it extremely difficult for other intending borrowers or fund seeker to avail themselves of the opportunity of enjoying such facilities among other consequences.

1.3 The project work therefore is aimed at evaluating the following points:

(a) To evaluate the problem of bad debts in banking lending

(b) To identifying its remote and immediate causes.

(C) To determine its effects to the economy in general.

(d) To make recommendation on how possible.

1.3 DEFINITION OF TERMS:
1. BANK: Otherwise specially stated bank in this study refer to commercial banks. Commercial bank is described by the banking act, 19689 as a bank whose business include the acceptance of deposit, withdrawal by cheque include loans and advances.

2. CAPITAL: This is the amount used for the commencement of business with addition subsequently made. It is also a set aside wealth for the production of more wealth.

3. LOAN CREDIT RISK: This is the profitability that a borrower may not repay the loan granted him by the bank.

4. MONEY RATE: This entails the possibility of value of money increasing or decreasing.

5. MARKET RATE: The probability of the interest rate change.