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This study was conducted to evaluate the loan giving and recovery issues faced by commercial banks. The research was designed to accomplish the following goals: To learn about the various challenges associated with loan recovery, the effects of loan default on commercial banks, and the actions that will be used to reduce the incidence of loan default.

Data was gathered from both primary and secondary sources. Questionnaires were the major data collection instruments used, with secondary data derived from other relevant publications.

Following data analysis, the following conclusions were reached: The problem of loan default stems from the inability of banks to dispose of security in order to realise funds.

In addition, the customer’s attitude towards loan repayment. Based on the findings, it was suggested that commercial banks implement some risk control procedures to help them avoid loan default.

Also, before approving a loan, they should rigorously review the project statement supplied by the customer or borrower to determine the realistic payback pattern and to determine whether the projects are practical based on the customer’s historical performance.

Furthermore, the Central Bank of Nigeria should foster an atmosphere conducive to the successful operation of commercial banks in Nigeria.


Almost every firm has a credit arrangement with a financial institution, particularly a bank. Some businesses rely on short-term loans on a regular basis to meet their temporary working capital needs.

Others utilise long-term loans largely to finance capital expenditures, new acquisitions, or permanent capital expansions. Regardless of the form of loan, all credit requests require a thorough examination of the borrower’s ability to repay when due.

Commercial banks conduct ordinary banking business with the general public, such as exchanging cash for bank deposits and bank deposits for cash, transferring bank deposits from one corporation to another, exchanging bank deposits for bills of exchange, acting as trustees and executors, providing safe custody of funds and valuables, and remitting foreign exchange.

Although commercial banks vary by country, their profit and banking motivations are the same. Their activities are of interest to their consumers, employees, and, most importantly, shareholders.

The business goal of a bank is to maximise profit, while other social and economic tasks tend to divert banks’ attention away from profit maximisation.

Commercial banks’ goals and objectives have thus opened the road for their clients to make and get credits, in the form of loans, in which the researcher is interested. Because of its direct influence and impact on economic growth and corporate development, lending has become a critical function on the operation.

The suppliers of unseen funds and the consumers of the funds for productive purposes are the two key parties that drive economic growth in a market-oriented economy. These two individuals are dispersed throughout the economy and may have no direct interaction with one another.

This necessitates the use of an intermediary to connect them. Surplus funds are mobilised by the banking sector from small and large savers who have no urgent need for such cash.

These funds are used by business entrepreneurs and investors who have amazing ideas for increasing wealth in the economy but lack the requisite resources to put those ideas into action.

These individuals approach banks in order to seek a loan. As a result, lending is a dangerous enterprise that banks only undertake after conducting a thorough and comprehensive examination of the project for which credit is being made. Banks’ primary concern is making loans to its consumers.

Thus, among the main tasks of the bank’s management are the creation and implementation of such lending policies. A bank’s lending policy must specify how much money will be made accessible to whom, for how long, and for what purpose.

As a result, lending regulations should be carefully defined so that lending officers understand the areas of restriction and where they can operate.

Furthermore, such regulations should be submitted to periodic review in order for banks to stay up with the economy’s dynamic and innovative nature while competing with other evolving economic sectors.

As a result, the primary goal of credit analysis is to determine the risks associated with extending loans to bank customers. In the financial world, risk usually refers to the unpredictability of earnings.

Lenders are especially worried about negative fluctuations in net income or cash flows that impair the borrower’s capacity to service a loan.

Some risks can be quantified using historical and expected financial data, while others, such as those linked with a borrower’s character and willingness to repay a loan, are not.


Banks have recently failed as a result of loan recovery issues. The primary source of bank profits is loan. Banks, on the other hand, have their own goals in terms of lending, which include profitability, expansion, safety, suitability, and liquidity. Loans that are not recovered may have a negative impact on banks.

It is easier to grant than to recover. In most cases, proficiency, i.e. knowledge and expertise in the recovery process, is required. It can be difficult to recuperate at times. When they are not recovered, the consequences are frequently severe for the bank.

It can result in illiquidity, insolvency, or even distress, depending on the circumstances. As a result, techniques for efficient loan recovery are required. That is the pinnacle of the issue.


Given that a commercial bank’s lending aims are to offer growth, profitability, and liquidity, and that deposits are a source of income for the bank, the cumulative effect of loan failure will be a loss of confidence in the banking system.
As a result, the researcher sought to:

1 5 1. Identifying the many challenges associated with debt recovery 2. The consequences of commercial bank loan default 3. The strategies that will aid in lowering the occurrence of loan default.

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