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Credit Control Policies in Financial Institutions

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Credit Control Policies in Financial Institutions.


The focus of this study is on Credit Control Policies in Financial Institutions and its efficacy in minimizing loan losses. In order to achieve a purposeful study, the research reviewed related literatures on Banking, Bank lending and credit administration.

An analysis of  the  responses from credit officers and information obtained from the secondary sources was carried out. The major findings among others are that:

  • Most financial institutions have formal credit polices enshrined in a manual to guide the credit officers and
  • Financial institutions usually include in their credit policies the loan territory, types and tenors of loans, acceptable securities, and the procedures for assessing, approving and monitoring credit
  • Financial institutions operate under a highly regulated environment through some government agencies such as the Central Bank of Nigeria (CBN), the ministry Finance, among others.
  • that despite the laudable credit policies, many finance organizations still suffer loan losses mainly because of unsound judgment by he credit officers, management override, lack of adequate supervision, or frauds and
  • the provisions of, and compliance with adequate and sound Credit policies is paramount to minimizing loan


Banking business is generally that of accepting deposits from the saving surplus sector of the economy with a view to paying on demand or at an agreed future date and lending to the savings deficit sector of the economy. Banks are usually custodians of money and values of individuals and body corporate.

The Paton Commission (1948) defined banking as the business of receiving from the public on current account money which is to be repayable on demand by cheque and of making advance to  customers. The 1958 ordinance defined banking business as “the business  of receiving money on current account, of paying and collecting cheques drawn by or paid in by customers, and of making advances to customers”.

Banking business is defined in the 1969 Act as “the business of receiving monies from outside sources as deposits irrespective of the payment of interests, The granting of money loans and acceptances of credits or  the purchase of bills and cheques or the purchase and  sale of securities  for account of others or the incurring of the obligations to acquire claims in respect of loans prior to their maturity or the assumption of guarantees and other warranties for others or the effecting of transfers and clearings


Adeniji, O.A. The Law and Practice of Banking in Nigeria,Ibadan:University of Ife Press, 1981.

Agene, C.E, The Principles of Modern Banking, New York: Harper and Row, 1968.

Chandler, L.V. The Economics of Money and Banking, New York: Harper and Row, 1968.

Cox D. Success in Elements of Banking New York: John Murray, 1980

Dyer, S.  A  Practical  Approach  to  Bank  Lending,  London: Institute of Bankers, 1997.

Femi Adekanya, The Elements of Banking in Nigeria, 2nd , London: Graham Burn, 1984.

CSN Team.

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