DEBT RECOVERY TECHNIQUES IN THE BANKING SECTOR, PROBLEMS AND PROSPECT

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND TO THE STUDY    

Actually, debt are not exempted from any successful business, because there must be a debt in every successful business due to activities involved in their operation. Debt can be occurred as a result of banks overdraft, borrowings fraud and forgeries and so on, therefore bank recovery of debt is through the rules and regulation guiding the institution. Then, another method of debts recovery is by the management of bad debt as lender to explore all available sources for the repayment of debts, as it must be quite unfriendly exercise carried out by the bank management against any defaulting customers to forcefully require the banks money in the recovery of debt process, there must be consistence of the secondary position of the use of debt collections recovery by legal proceeding and also there should be room for debtors to invites the precedent law of equitable right of redemption into debt consideration, so as to enable the debtor pelage for further future date to pay back with interest occurred by the money borrowed: before any legal action can be taken, pending on the rules and regulation guiding the bank to recover, basis on transaction. Bank may adopt a way returning it debts from deptors. The debt recovery has been describe as the responsibility for planning effective economy which do help to regulates the operation of the banking sector in fulfillment of a given task or purpose.

Although apart from the above definition there are other definition by failed bank recovery debts and financial malpractice define debts recovery as a means of any loan advances, credit, accommodation guarantees or any other facilities together with the interest rate to show the out standing unpaid against its customers in favor of the bank recovery debts from the debtors. Beside the bank do encounter problem between its customers for inability to pay back debts. Then, in the side of the banker their supervision is poor in term of fund, documentation and credit concentration, which consequently make bank unable to meet its obligation on financial management.

The banking system has been single out among industry, which has heavier regulations than any other economic activities that governs its operation in the system, or its anticipation constituted by laws. But the current banking sector has some constants widely acknowledge arising from non-performance of loan which create a number of factors such as poor management loan policy on income growth and unsound judgment, fraud, forgeries through federal government that set-up the Nigeria deposits insurance corporation (NDIC) to protect the interest which most have resulted to problem toward their operation, and its was established by decree No 22 of 1988. So the banking industry has been single to play a specific role in protection the economy growth of due process and development. Also there was a body or union set-up by federal government by decree No 18 of 1994 establishment to failed bank (Recovery of debt and financial malpractice tribunal, that were authorized to recover debt owned to failed bank.

1.2  OBJECTIVES OF THE STUDY 

(1) To identify debt recovery techniques in banking sector

(2) To indicate debts recovery techniques employed by banks

(3) To find out the problem of debts recovery in the banking sector

(4) To identify the prospect of debts recovery in the banking sector