Debt Recovery Procedures and Strategies in Commercial Banks in Nigeria. (A case study of UBA Ekpoma)


Title page                                                                         i

Certification                                                                     ii

Dedication                                                                       iii

Acknowledgements                                                          iv

Table of Content                                                              v

Abstract                                                                           vi


Background of the Study 1

Statement of Research Problem                                 3

Research Questions                                     4

Objective of the Study 4

Significance of the Study 5

Statement of Hypothesis 6

Scope of the Study 7

Limitation of the Study 7

1.9   Definition of Terms                                                  8



Introduction                                                         12

Meaning of Debt in Bank 14

Causes of Debts in Bank         15

Impacts of Debts in Banks and Entire Economy 20

Debt Recovery Challenges                 22

Preventives Measures of Debt in Banks 23

Debt Recovery Procedures and Strategies in Banks 26



Introduction 31

Sources of Data 31

Sample Size 32

Data Presentation and Analysis                 33

Restatement of Hypothesis References 38



4.1   Introduction                                                             40

4.2   Data Analysis and Presentation                              42

4.3   Test of Hypotheses



5.1 Summary of Finding                                                  47

Findings                                                                          48

Conclusion                                                                      50

Recommendations                                                           51

Bibliography                                                                    54


Even as granting of loan is been described as the ‘”Power Point” in banks; the struggle with the non-performing loans (debts) remains one of the most serious issues in banking sector across the globe, particularly in developing countries like Nigeria. Despite the strict considerations of cannon of lending applied in loan appraisal of customers, there is still no single bank that is not confronted with non-smooth repayment of loans. Non compliance with the terms and conditions of loans by borrowers is what is leading to the huge portfolio at risk (PAR).

Conversely, sequel to the big effects of debt on bank in particular, the researcher makes effort to carry out research on debt recovery procedures and strategies in commercial banks in Nigeria, using United Bank for Africa (UBA) Plc, Ekpoma, as a case study.

The research will contain five chapters. the chapter one contains the introductory part, which consist of; background of study, statement of the research problems, research questions, objectives of the study and significance of the study. The chapter two contains the detailed literature review of the research topic. The chapter three comprises of methodologies. Chapter four consist of methods of data collection and analysis of data gathered and finally chapter five embodies the summary, findings, conclusion and recommendations.






One of the most important responsibilities of banking organizations in Nigeria and all over the world is the granting of facilities (loans) to borrowers after successful mobilization from the surplus unit to the deficit units of the economy. The lending to individuals or corporate bodies can either be by way of loans and advances.

The level of extension of loans and advances to customers determines the degree of returns on loans and advances. This enables the bank to advance towards the achieving of the main objectives of profit maximization.

However, although the service of granting loan is the vehicle that move the bank to it stage of success, it is observed, that they are not without problems of bad debt. The high risk banks takes is the approval of loans for borrowers. Whatever form of lending is granted by commercial banks to borrowers, the main issue is that a debt is inevitably created between the bank (creditor) and borrower (debtor). The bank automatically becomes the creditor and borrower, the debtor.

Today, no single commercial bank in Nigeria can proudly declared that it has not been affected by the problems of loans and bad debts or will never be confronted with the issue. Many loans falling into the class of bad debt accounts and proffering the possible way of recovery, is way of life in banking sector today.

In this research work, debt recovery procedures and strategies in commercial banks in Nigeria will critically be examined with area of coverage limited to United Bank for Africa (UBA) Plc, Ekpoma Branch.

According to the CBN Prudential Guidelines, (2010) non-performing loans and advances interest are not part of the bank’s income because it’s not realistic until debts and interest are realized by the bank. Bad debts are regarded as negative contributors to the profitability of commercial banks. The only possible way the bank can make these debts and it’s accumulated interest realizable, is if the bank has in place an effective debt recovery procedures and strategies


Lending is the engine on which banking activities moves because it provides the largest part of the profit. The banking has to be efficient in its credit administration in order to ensure effective and efficient allocation and utilization of the loan able funds. With well managed credit administration, economic development and growth is guaranteed. However, the banks in Nigeria are faced with issues of bad debt and how they can eventually be recovered. Bad debt occurred when the borrowers are unable to amortize their loans and when this occurred; it brings heavy burden to the bank on recovery these debts. (Adebayo 1990; 1)

It is very important to state clearly some of the prevailing problems of loans and debt recovery, how it has impeded the smooth operations of the commercial banks and thereby hindering the banking sector the golden chances of rendering its unique objectives to the entire economy.

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