Evaluation Of Credit Management And The Incident Of Bad Debt In Commercial Bank

The growing case of classified debts and the increasing trend in the yearly provisions for bad and doubtful debts in commercial banks suggest that there may be errors in the administration of credit by the commercial banks in Nigeria. With this background, the leading policies of the credit management in a typical commercial bank the Union bank of Nigeria PLC was appraised with a view to ascertaining the causes and consequences of bad debts as well as to find ways and means of reducing the incidence therefore. The researcher thought test techniques intended to ascertain which find diversion has any effect on bad debts of Union Bank, to determine to extend to which government intervention in unding policies of Commercial banks has influence bad debt in Union Bank and to determine the extend to which government intervention in lending policies of commercial banks has influenced bad debt in Union bank and to determine the extend to which improper project evaluation influences bad debts of Union bank.
A questionnaire was used to collect data and together with information obtained from oral interview and desk research as well as documented and analysed by the use of Chi-square statistical test techniques. Three hypothesis were tested on effect of fund diversion, government intervention in lending policies and the extent to which improper project evaluation influenced bad debt of Union bank.
Relevant variable were determined and the effectives of bank loan management were measured using statistical indices and ratios.
Evidence from the reglanch shows to the acceptance that fund diversion affect bad debt in Union Bank, government intervention has direct influence on Union Banks bad debt and that improper project evaluation has significant influence and bad debt of Union bank.
On these basis, the researcher made her recommendations and concluded that banks should lent to viable projects and ensure that it is backed by adequate collateral.
It is suggested that future research in this area should examine on community banks, foreign banks and government owed bank like federal mortgage bank of Nigeria.