AND DEBT RECOVERY IN FINANCIAL
CASE STUDY OF U.I.D.C PLC, WARRI DELTA STATE)
The purpose of this study is
to evaluate the impact of Credit and Debt recovery Department in financial
institution. It is also meant to assist the investment Company to identify some
of its problems with a view to proffer a solution.
Chapter two of this project
reviewed some of the literatures that have been written about credit, debt
recovery and its impact on organization, particularly an investment as all
their transaction involves cash and credit facilities.
In Chapter three, emphasis
is placed on the various techniques adopted by the researcher for data
collection as well as describing the population used in the research work. Both
primary and secondary data collection methods, such as questionnaire and
documentary evidence were applied for the purpose of extracting relevant
information from staff of the company. Unlike the above chapter which
concentrates on the techniques used for data collection.
Chapter four, however, is
based on the presentation and analysis of the information collected, i.e.
analyzing the various responses from the management staff and beneficiaries of
such loan. The Chapter also went further to test the hypothesis with a view to
confirming or rejecting the assertion made that credit and debt recovery
department plays a vital role towards achieving the objectives of financial
And finally, in Chapter
five, efforts have been made to summarize all that was said in the previous chapters.
Conclusion, Suggestion, and Recommendation were also made to the Management so
as to enable them improve operational capacity related to credit and debt
TABLE OF CONTENTS.
Table of contents
Historical Background of
Statement of General Problem
Objectives of the Study
Significance of the Study
Scope of the Study
Limitation of the Study
Definition of terms.
2.1 Review of the related literature
3.1 Instrument used
3.2 Research population and sample size
3.3 Sampling procedures
3.4 Validity and reliability
3.5 Statistical techniques used
PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation and analysis of data
4.2 Test of hypothesis
SUMMARY, CONCLUSION AND
major function of the banking system is the transfer of funds from the surplus
units to deficit units of the economy. This is achieved through deposit
mobilization and onward lending to customers by ways of loans and advances.
investment companies in Nigeria today cannot equivocally declare that they have
been untouched by problem of loans certainty; it is a way of life in these
tumultuous times of investing that virtually all investors are faced with
form of lending is adopted by investment company in any given situation depends
on the purpose of the borrower and the circumstances of the transaction. The
important thing to understand is that regardless of the form investment lending
takes, a debt is inevitably created between the Investment Company and
investment company becomes the creditor and customer, the debtor. Review of
loan facilities span served stages from the request stage to the repayment and
when the facilities get bad.
this research work, the aim is to outlines the prerequisite for loan, warning
signals, management of problem loan as well as debt recovery strategies with
the impact of the credit and debt recovery department towards recovering of
appears that the review of a debt recovery structures should be related to
review of analytical tools of credit facility towards its restructuring,
preparing a workable game plan or pay out plan. In this project, the subsequent
chapters will look at prevention of problem debts and various strategies for recovering
1.1 HISTORICAL BACKGROUND OF
Universal Investment and Development Company Plc is a Development, Finance /
Management Consultancy institution.
Company was incorporated by the then mid-western state government in 1971 under
the name, Nigeria Economic Welfare Services (NEWS) Limited as a purely
consultancy outfit. In 1987, the Company was re-organized into its present
status as a Development Finance/ Management Consultancy institution, under the
name Universal Investment & Development Company Plc. Its scope of
activities was similarly enlarged to reflect its enhanced status.
February 2000, by an agreement between the government of Edo and Delta states,
the Company was ceded to Delta State Government, thus becoming a wholly owned
Delta State Government Company.
Plc is an investment development and finance company, undertakes investment
activities and participates in the capital and money markets in order to take
full advantage of opportunities present by the markets for the enhancement of
the company’s wealth creative capabilities.
development activities involve mobilizing funds internal and external sources
which could be used in providing medium and long term finance in the form of
loans and equity for small and medium scale industrial projects and for short-
term facilities in Delta State in particular and Nigeria in general.
also involves the rendering of consultancy services. As a finance company , it
is involved in the provision of short- term finance services.
1.2 STATEMENT OF GENERAL PROBLEM
is paramount to state as clearly as possible some of the prevailing problem of
loan and debt recovery, how it has impeded the smooth operations of financial
institutions and thereby hindering the banking sector chances of achieving its
essence is to appreciate the magnitude and the vital roles which the investment
company plays as the lubricant to the economy, as a sector, it is the pillar of
the economy. It is therefore as a result of these important roles that the
researcher have taken pains to carryout an in depth research into the impact of
credit and debt recovery department in investment company with the view to
identifying not only the problem loan, but the possible causes of this loan
becoming bad debt and possibly make recommendation that will perhaps assist in
solving these problems.
1.3 RESEARCH QUESTION
the course of this research project, emphasis is to be made so as to answer the
following research questions:
Criteria for judging the credit worthiness of an applicant
Is there any standard procedures for collecting loan?
Do financial institution review their lending and collecting policy?
Is there any step needed to be taken to recover loans from defaulters?
Does credit & debt recovery has an impact in Investment Company
1.4 RESEARCH HYPOTHESIS
the purpose of achieving the objectives of this study, the information and
relevant data will be collected and tested in subsequent chapters. The Null and
Alternate hypothesis are given as follows:
– Credit and Debt recovery plays a vital role in Investment Company.
- Credit and Debt recovery does not
play any role in Investment Company
1.5 OBJECTIVES OF THE STUDY
aim of this research work is specifically:-
To uncover the root cause of the problem embodied in loan recovery
To comprehensively review how to conduct a credit interview / credit evaluation
or ascertain the credit worthiness of a customer.
c) To intensively study how credit can be
administered and debt recovery strategies
is indeed the researcher’s hope that by the time these objectives are achieved,
a clear picture of the problems will surface and subsequently recommendations
on how to go about tackling the problem will be made, it is also the
researcher’s hope that by the time this is done, the attitude of the investment
company towards lending and the borrowers attitude will change as it is only
when the money lends are paid back that the company remains in business.
1.6 SIGNIFICANCE OF THE STUDY
in all research work, the significance of this study are :
To provide additional material to carry out future research in this area
To increase and widen the scope of the researcher’s knowledge
To educate and enlighten the public on the impact of credit and debt recovery
department towards accomplishing the organization objectives.
To assist the investment company in identifying some of its pressing loan
problem with a view to take steps in recovering such loan which will make it
achieve its overall objectives.
1.7 SCOPE OF THE STUDY
researcher have decided to limit the area of coverage to Universal Investment
& Development Company Plc , Warri Delta State, due to the nature of its
activities particularly the department of Credit and Debt recovery division
considering that they perform similar activities in the head office , other
branches in the industries. It will be quite difficult if not impossible to
cover the entire investment industry as it would involve traveling in order to
have access to materials for information and other logistics which may
eventually hamper the effort of the researcher.
1.8 LIMITED OF THE STUDY
conducting a research, the researcher is faced with some constraints. The
prominent constraints faced as a result of conducting the research are as
i) Financial constraints, the present economic
hardship amplified by the increase in fuel price has limited the researcher’s
movement for this purpose.
Time constraints, academic work for the semester occupied most of the time
required for the research work allowing limited time for the research work
Facts and vital information’s regarded as secret are been hoarded from the
research, thereby limiting the information’s required
Problem of busy schedules, rescheduling of booked appointment s, receiving
phone calls and unscheduled meeting.
1.9 DEFINITION OF TERMS
terminologies used in this study are defined below for the clear and understanding
of such terms by the readers.
SECURITY - Can
be defined as a cash or fixed assets pledge by customers to secure loan.
This involves any written and endorsed papers that in one way or the other
relates to the lending transaction.
DEMAND NOTICE -
This is a reminder to the Client that a certain amount is due for repayment and
the Client is advised to come along and meet his obligation.
STATUTORY NOTICE –
This is a legal notice sent to the Client that he has certain period (usually
three months) within which he must pay his loan.
FULL BACK ON GUARANTEE – This
case applies in a situation where the loan is guaranteed by outside body.
Is a contract between a lessor (the owner) and the lessee (the user) for hire a
specific asset selected from a manufacturer or vendor of such assets by the
LOAN – Is the
facilities extended through loan accounts for investment products of medium and
long term nature where amortization is at predetermined intervals or made in
full at the end of an agreed period.
Is simply the lending to one borrower by a group of banks or lending
Money given to a customer for later payment
CREDIT MANAGEMENT –
Arrangement put in place of repayment of credit facilities
DEBT – Is the
credit received by a borrower from a prime lender who may be a formal or
informal financial institution.
BAD DEBT – Are
debt are doubtful of recovery
FINANCIAL INSTITUTION –
Refers to in this study represent mainly the banking sector and other investment