A bad debt is one of the problems facing by banks and other financial institution. The objectives of this project work breakdown into various stages for easily understanding is contain five chapters. Chapter one deal with introduction of the study, background of the study, aims and objectives of the study, statement of the problem etc. Chapter two contains Literature review, the conflict between profitability and liquidity, implication of bad debt to the organization, staff customers and share holder, principles of lending etc. Chapter three deal with the Re-statement of research hypothesis, research design, population of the study etc. Chapter four includes presentation of data, area of study, history of Union Bank of Nigeria plc while chapter five make necessary recommendation to Union Bank and other financial institution in Nigeria on bad debt.