The Project File Details

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Title page                                                                                 i

Certification                                                                              ii

Dedication                                                                                iii

Acknowledgement                                                                     iv

Table of contents                                                                      vi


1.0   Introduction                                                     1

1.1   Historical Background of commercial banks    1

1.2   Statement of the problem                                 8

1.3   Aims and objectives of the study                        10

1.4   Justification on the study                                 11

1.6   Limitation of the study                                     12

1.7   Chapterization                                                  13


2.1   Literature Review                                              14

2.2   Historical Background of United Bank Africa Plc 18

2.3   Concept of Bank credit                                     23

2.4   Lending Policies and objectives                 23

2.5   Importance of lending                                       25

2.6   Canon of lending                                              27

2.7   Characteristic of Bank credit                                 32

2.8   Limitation on the Powers of Commercial Banks to lend  39


3.0   Research Methodology                                      38

3.1   Source of data collection                                   38

3.2   Primary source                                                 39

3.3   Secondary source                                             39

3.4   The significant of Bank to the development of Nigeria

Economy                                                          40


4.0   Lending Against Security                                  43

4.1   Land and Security                                            46

4.2   Data Techniques                                               48

4.3   Data analysis                                                   48


5.0   Summary, conclusion and recommendations     66

5.1   Findings                                                           66

5.2   Conclusion                                                       69

5.3   Recommendations                                            70

References                                                        72


source of financing both small scale and medium scale.









The history of commercial bank in Nigeria date to the take over of a branch of the African Banking Corporation in Lagos by Elder Dempster and company in 1892-

The takeover of this out coast of the African Banking Corporation with head quarters in South African and which \vas established essentially for the importation of silver in1891, its failure to realize this goal to its lived and it was replaced by the British Bank of West Africa (BBWA) in 1893 with $20,000 capital later increased to 3100,000 during the same year. It was registered in London as a limited liability company in March 1894 and the first Lagos branch was opened in the same year other branches were opened in major West African cities like Accra, free town and Bathurst. The bank opened its second Nigerian branch in old Calabar in


Until 1971 when British Bank of West Africa was toned by another.

Bank, the colonial bank British of West Africa. This bank enjoyed an in challenged sway in the Nigeria commercial Banking scene. Having taken over the Anglo-Africa bank (Bank of Nigeria) 1899-1912. By untrue of this monopoly, BritishBank of West African enjoyed the privileges off supplying silver coins to West African Currency Board system.

The emergence of the colonial bank in 1916 and the taking up of its activities in 1917 broke the monopoly which the British Bank of West Africa enjoyed.

In 1925, the bar days Bank of United Kingdom absorbed the colonial bank and from them on the name become Bar day bank DCO (Dominion Colonial Overseas). This Bank opens its first branch in Lagos in 1917 (it is now known as the Union Bank) soon after, wine other branches were opened.

The Nigeria banking scene was therefore dominated by these two British banks, BBWA, and Bar Days Bank DCO between 1894-1933.

The dominance of these two British banks was challenged in 1948 by the arrival of British and French bank now called United Bank for Africa Pic, (UBA) making it the third expatriate bank to dominate early Nigeria commercial banking.

The foreign bank came principally to render services in connection with international trade, so their relationship at that time was chiefly with the expatriate trading companies and with the government. They largely ignored the development of local African entrepreneur ship.

International Bank for West Africa is one of the late arrival among the expatriate banking Nigeria having been established in 1959, Originally it was known as banquets International Pour Afrogue occidental which has a number of consortiums of French and British banking interest and a principal fmancer of groundnut trade in nieghbouring Niger republic.

These four expatriate bank have since been joined by many other varied national interest the Banking sector in Nigeria has undergone significant trans for motion both in term of number and product creatively and the level of operation which was a result of economic reform embodied in the structural adjustment programme (SAP) in 1986. In term of growth in the number of banks, the commercial bank operating during that year were 12 with 27 branches nation wide, this number grew to 54 with 2193 branch for the commercial bank and 38 with branches for the merchant bank in 2000 with the introduction of Universal Banker’s in 2001. However, in 2003 and 2004, the number fell to 89 and 87 respectively.

In order to make Nigeria bank globally competitive, the central bank of Nigeria, July 6, 2004 announced a reform programme for the national banking industry, the main thrust of which required the 89 deposit money bank their the system to raise their capital base to minimum of #25 billion each through   injection   of   French   capital   and   or   mergers   and acquisition.

At the close of first phase of the consolidation program in



December 2005, 25 banks, have emerged having met the minimum     capitalization     requirement     through     mergers, acquisition and injection of fresh capital.

However, at the expiration of the December 31, 2005 deadline, 14 banks failed to secure merger partners and were not able to make minimum capitalization requirement in their own.




Banks make most of their profit from lending but there are some problems limiting the ability of bank to lend. However, this study provides solution to the problem of bank credit and some of the problems are.

[i]     Operation of Central Bank in regulating the volume of money in circulation for example the uses of Bank rate open market operation, special directive and cash deposit ratio.

[ii]    Inability of borrower to present acceptable security to bank.

[iii]    Unwillingness of customer to deposit their money in the bank.


[iv]     Less liquid cash label to the bank.



[[v] Unwillingness of some bank to grant loan in order to avoiloan in order  to avoid drain and a particular bank so that they can meet their customer deposit with drawer

[vi]     Unwillingness of member of public to borrow from the


vii]   High interest rate charged by commercial bank on loan granted to public.


This study is aim to examine the impact of bank credit to development of Nigerian economy.

Secondly to expose the prospective investors to various credit available in the bank, which the banks are ready and willing to grant such investors provided they meet-up the require for the credit facility.

The research, also feels obliged, to let the reader of the project, know how the bank, through its credits helps, in encouraging small scale firms towards the development of the nation’s economy.

Finally, after a thorough perusal of this project, reader will come to know who is qualified to apply for bank credit the procedure for obtaining such credit and how such credit mist be applied.


The project will not fail to commend the bank for its services and give recornmendation on where necessary, hence, thus who are business oriented but do not have the mean or resources to execute such business, will arrive maximum benefits from the write up since it will expose those to the various bank credits opened to them and how it can graded to



The   research   work   is   predictive   in   nature   the   study enable  business   man  to  familiarize  with  the   various  bank

credits available to finance business.



The study also is beneficial to those who are business oriented to know the various bank are not how it can be granted. The study also benefit student researcher to expose to meaning of bank credit and how it can develop the nations





There     are    many    commercial    bank    and    financial

institution that grant loan for the development of the nation’s economy.

This   study   would   have   considered   many   commercial bank and financial institution but for effective of the research it only limited to United Bank for African Pic Ilorin branch.


The researcher intends to carryout research work on the significance bank credit to the development of Nigeria economy using United Bank for Africa Pic as a case study.

However, the research work has been limited as to lack of time, lack of recent and adequate material, insufficiency of fund.

However, effort has been made to ensure that the above limitation did not lender effective completion and quality of research work-


Chapter one, it lays emphasis on introduction, historical background of commercial banks, statement of the problem and objective of the study, justification of the study, scope and .imitation and definition of terms.




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