SECURITIES PERFECTION AND DEBT RECOVERY IN THE NIGERIAN INDUSTRY (A CASE STUDY OF SKYE BANK PLC NIGERIA)
Bank plays important roles in the economic life of a country particularly a developing nation through the provision of banking services. As agent of development, they provide loans and advance including a variety of contingent facilities, which could either be short term or long terms. This explains why credit guidelines contained in governments monetary circulars stipulate aggregate causing on credit creation as well as the sectionals avocation which bank other financial institution must comply with during a fiscal year.
In recent time, banks have witnessed a phenomenal growth in term of loans in their portfolios and the need to finance industrial project in line with the nation’s rapid growth industrialization.
Some of the facilities generally provided by bank included: short term finance, medium term finance, long term finance building / mortgage wars advance against produce etc.
When banks are providing these kinds of facilities and some others, they are exposed to some risks. Lending has some other are exposed of some risks lending has become a vital function inn banking operations because of its direct effect on economic growth and business development.
Though a banker is expected too exercise consideration skill, use his experience techniques in analyzing credit proposal and assessing the risks, it has been established from experience that unforeseen situation sometimes affect the borrowers ability to pay and this has banks to insure themselves in case the unexpected happens by demanding some form security.
Securities and perfection are particularly relevant to our situation in this country. Bad debts simply means loans or facilities granted to a customer but cannot be recouped by the bank from the customer after all efforts it has been intensified.
1.1 STATEMENT OF THE STUDY
In the years past it has been observed that undocumented unperfected loans accounted mainly for the couapsed near couapse of many bank both in Nigeria and abroad (First –bank of Nigeria Bi journal Vo1. 6 1998 December)
1.2 OBJECTIVE OF THE STUDY
The objectives of this study banks plays important role in the economic life of a country particularly a developing nation through the provision of banking services. As agent of development, they provide loans and advance including a variety of contingent facilities, which could either over be short term or long term.
1.3 RESEARCH QUESTION
The research questions of this study were borne out of the huge debts which come about as a result at bank liability to realize the security pledged due to poor credit documentation and perfection. The questions therefore are:
- What are the affects of poor credit documentation on bank credits?
- What are the types of acceptance securities and documentation procedure for the purpose of lending?
- What are the various types of method adopted for debt recovery?
- What should bank do when they notice any sign credit becoming doubtful?
1.4 STATEMENT OF HYPOTHESIS
The research hypothesis employed for verification is stated below:
HO There are a lot agitation on the significance of good securities to and bank lending prior to this write –up some bank customers complained that their bank deprived them from financial assistances in time of need for investment purpose due to their inability to procedure reasonable counteracts not minding their wing standing good record with them,
In the same vein bank also in them bitter experiences in loan reconciler argued their position even securities are taken for loan and advances.
1.5 DEFINITION OF TERMS
This section embraces a brief explanations on specific terms not of common usage that appeared in the body of the work such terms includes.
Credit this term used for an amount of money granted by bank calendar to a customer (Borrower) in form of loan and advance in order to finance capital.
Perfection: - This is the process of investigating the trade owner of a security, its documentation and obtaining the governors consent (incase of legal mortgage)
Documentation: - This is the term used in obtaining security in the legal form and the process of recording, perfecting and security.
Security: - In the legal from and the process of recording, perfecting and security.
Security; this term denotes property pledge by a borrower as a means of guarantee for the credit grantee e.g lends shares e.t.c
Default: - This term sued when a borrower fails to fulfill his obligation or when he fails to repay the amount granted to him as credit.
Debenture; it denote an instrument issued by a company or individual acknowledging the indebtedness at a stated time with interest there of.
Stamping: - This term is used as an evidentiary created on the mortgage created. The mortgage created should be stamped within 30 days of the execution.
Registration: - It can notes that document created must be required incompliance with either case law or statute and is done at corporate affairs commission within 90 days.
Insured: - This terms is used by insurance company which loans, “Risk Against loses”.
Ubcirmaefidel: - This is an insurance term, which explain that every information required must be given is utmost good truth.