Agricultural Loan Disbursement And Repayment In Nigeria Commercial Banks
The objective of this study is to evaluate agricultural loan disbursement and repayment in the Nigeria commercial banks. In particular it is intended to examine the adequacy and repayment in commercial banks. In carrying out this research both. Secondary data were collected through the use of quantitative and qualitative analysis of data and other information which were administered to the agric department of afribank Nigeria plc.
The result of the analysis should that agricultural loans has not been effectively disbursed by the Nigeria commercial banks also the beneficiaries of such loan has not been repaying them promptly.
1.1 Background of the Study
A commercial bank can be defined as a financial institution or company carrying on the biz of receiving monies other valuables as deposits from the public for keeping and for lending to the investors on short and medium term basis on which it charges interest such deposit or repayable on demand to the depositors or order. ADEKANYA(1993)
The early commercial bank in Nigeria were established by the colonial Govt and mainly catering for the interest of the expatriates, thus (i) financing export trade and neglecting agricultural financing. The discriminatory attitude makes some Nigeria to establishing indigenous commercial banks could be found in the country which include union bank plc, first bank plc, universal trust bank limited and afribank plc.These institutions perform such services which include the acceptance of deposits in form of cash or cheque from the public granting of loans and overdraft faculties to customers, issuance of letters credit to worthy customers and fund transfer service discounting of bills. Etc. Despite the amount of loan being channeled to the agricultural sector for industrial development by commercial banks, the agricultural sector still suffers from some in he rent problems militating against the industrial and agricultural of the nations. And there has been continuous shortage of basic food items in the nation as a result of lack of agricultural development.
The prices of food items are always develop as result of limited yearly output of agricultural products. A huge sums of foreign exchange is spent annually on the important of raw materials for local industries which would have been source locally, if the agricultural sector was full developed. Also farmers and other agro-base ventures are not motivated towards obtain agricultural loan facilities due to the banks stringent measure of loan appraised, disbursement &re-payment.
Finally, a lot of foreign exchange earnings which would have been earned through commodity exports as a result of improved agricultural product could not be achieved due to the under development of the agricultural sector GREENER (1990). This study will therefore focus attention agricultural loan disbursement and repayment in Nigerian commercial banks in the there to look the factors that militate against the proper disbursement and repayment of such loan in other to revitalize the agricultural sector so as to be self sufficient in food production and for the economic development of the nation.
1.2 Statement of the Problem
The commercial banks, farmers and other agro based industrials are faced with problem arising from the disbursement and payment of agricultural loans
There is a problem of insufficiency of liquidity awardable to the commercial banks to meet loan applications by prospective customers or farmers due to Govt policies on reserve requirement of commercial banks. The customers and farmers irritability in repaying the loan give to them also militate against the willingness of banks in agriculture loans. Sometime the security to be offered by customers for such loans become a problem as some customer found it difficult to offer a collateral security for such loans which even tonality deprive them from obtaining agricultural loans Furness (1991).
Most farmers and other agro-based ventures customers deviate from investing the proceeds of the loan on agricultural ventures for which purpose such loans was extended during a period of cash sequence in the economy commercial banks often finds it difficult to extend agricultural loans to credit worth customers due to scarcity of liquidity. These and other problems, the research intend to investing in this study.
1.3 Objectives of the Study
The purpose of this study can be over emphasized because of the increasingly shortage of food items, poor and inadequate implements being used by farmers and other agro-based industries and the inability of the commercial banks is extending facilities to customers due to repayment, security and other problem being encountered by bank.
The researcher is of the opinion that corrective measure to taken overcome these predicaments therefore the objectives of the study are:
- To identify the various criteria for obtaining agricultural loan towards the development of agricultural.
- To identify whether the agricultural credit policy of the government is being adhered to by both the customers and banks.
- To check the repayment capabilities of customers so as to ensure prompt repayment of approved facilities including interest charges.
- To motivate farmers and corporate customers in souring agricultural loan for expansion of their agricultural project.
- To encourage mechanized farming as a result of such facilities which could be used for the procurement of tractors and other farming input.
1.4 Significance of the Study
The study of this, is to emphasize on the increasing shortage of food items, poor and inductor implements being used by farmers and the inability of the commercial banks in extending facilities to their customers due to repayment security and other problems being encountered by bank.
1.5 Limitations of the Study
Firstly, the financial constraints caused by the present economic condition of the country made it different difficult for the researcher to be visiting Afribank Nigeria plc frequently as would have been the case through that did not defect the purpose and major objectives of the study, as the researcher finally and successfully achieved the purpose of her research work.
Secondly, in view of the finance and time consternates the research limited the literature review to what was obtainable in libraries and other sources that really and essentially served the purpose of the study and also in formation which were obtained from Afribank agricultural loan disbursement and repayment and procedures.
Finally the problems encounter while retrieving the guest ion to the study from the responses.
Recommendations and Conclusion
In this research work, one can see that the need to finance agricultural through commercial banks loan was a good gesture which the Government has placed have over the years tried to favors particularly the agricultural sector so that sector can be developed. The development of the agricultural sector can be developed. solve such problems such as food shortage. Problem of limited raw materials for both big and small industrial concern, malnutrition and generation of foreign exchange to the nation. Due to the important role agriculture plays if it is properly developed by granting loans to the farmers and agro-allied venture, the researcher therefore recommends the following to be done so that the aim can be achieved. The farmers should be educated on the importance of financing their project through bank loan. The commercial banks should adjust their loan portfolio to favour agricultural financing.
The considerations banks look up to before loans can be disbursed should be adjusted so as to remove stringent one and thereby granting loan on partial liberal base. Banks, the amount of loan the banks grant to customers should depend on the project itself and not based on limits.
Banks should also pay regular visits to project sites and so organize lecture for beneficiaries on how such loans can be effectively utilized to increase their turnover due so that other people can as well obtain loans too.
Banks should arrange repayment rather than making customers to pay the loans in lumps Ian
In conclusion, one can see that the Nigerian cing agriculture. Relative to other government sponsored institution their Inability, their inability to include in their range of products varies loan scheme has shown that development of agriculture as it is seen in other countries. However, the majority of the problems confronting the effectiveness of agricultural financing by commercial banks in Nigeria ranges from level of bureaucracy in loan processing and the size of the loan to be granted to re-covery of such loans from beneficiaries. It beneficiaries who have been granted agricultural loan operation and this will improve both the quality and quantity of annual output of agricultural products. The overall impact on the economy will be that development of agriculture thereby lending to self- sufficient in food production constituting source of raw materials for industries and also more foreign exchange will be earned from the venture.
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