AGRICULTURAL LOAN DISBURSEMENT AND REPAYMENT IN NIGERIA COMMERCIAL BANKS
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AGRICULTURAL LOAN DISBURSEMENT AND REPAYMENT IN NIGERIA COMMERCIAL BANKS
DISBURSEMENT AND REPAYMENT OF AGRICULTURAL LOANS IN NIGERIA COMMERCIAL BANKS
The purpose of this research is to assess agricultural loan distribution and repayment in Nigerian commercial banks.
It is designed, in particular, to investigate the adequacy and repayment in commercial banks. In doing this investigation, both. Secondary data were gathered by quantitative and qualitative data analysis and other information supplied to the agric department of afribank Nigeria plc.
The analysis should show that agricultural loans have not been efficiently dispensed by Nigerian commercial banks, and that the beneficiaries of such loans have not been repaying them on time.
INTRODUCTION TO CHAPTER ONE
1.1) BACKGROUND OF THE STUDY
A commercial bank is a financial institution or company that receives monies or valuables as deposits from the public for keeping and lending to investors on a short and medium term basis, for which it charges interest. Such deposits or orders are repayable on demand to the depositors or order. ADEKANYA(1993)
The colonial government established the first commercial banks in Nigeria, primarily to serve the interests of expatriates, [i]funding export trade while ignoring agriculture financing.
Because of the discriminatory attitude, some Nigerians have established indigenous commercial banks in the country, including union bank plc, first bank plc, universal trust bank limited, and afribank plc.
These institutions provide services like as accepting cash or cheque deposits from the public, offering loans and overdraft facilities to consumers, issuing letters of credit to deserving customers, and discounting invoices, among other things.
Despite the quantity of loan channelled to the agricultural sector for industrial development by commercial banks, the agricultural sector still suffers from some rent problems that militate against the nations’ industrial and agricultural development. In addition, due to a lack of agricultural growth, the country has experienced a consistent shortage of basic food staples.
Food costs are always determined by the restricted annual output of agricultural products. Huge sums of foreign currency are wasted each year on the importation of raw materials for local companies that could have been sourced locally if the agricultural sector had been fully developed.
Farmers and other agro-based companies are also discouraged from obtaining agricultural credit facilities due to banks’ severe loan appraisal, disbursement, and re-payment criteria.
Finally, due to the agricultural sector’s underdevelopment, many foreign exchange earnings that would have been made through commodity exports as a result of enhanced agricultural products could not be realised GREENER (1990).
This study will therefore concentrate on agricultural loan disbursement and repayment in Nigerian commercial banks in order to identify the factors that impede proper loan disbursement and repayment in order to revitalise the agricultural sector in order to be self-sufficient in food production and for the nation’s economic development.
1.2 STATEMENT OF THE PROBLEM
Commercial banks, farmers, and other agro-based businesses
Industrials are dealing with issues related to the disbursement and repayment of agricultural loans.
Due to government restrictions on commercial bank reserve requirements, there is an issue of insufficient liquidity available to commercial banks to meet loan applications from prospective customers or farmers.
Customers’ and farmers’ reluctance to repay the loans given to them also works against banks’ willingness to make agricultural loans.
Customers’ ability to provide collateral security for such loans can sometimes be a problem, since some customers find it difficult to provide collateral security for such loans, which can prevent them from acquiring agricultural loans. Furness, J. (1991).
Most farmers and other agro-based ventures customers deviate from investing the loan proceeds on agricultural ventures for which such loans were extended during a cash sequence in the economy commercial banks frequently finds it difficult to extend agricultural loans to credit worthy customers due to scarcity of liquidity. The research intends to invest in this study to address these and other issues.
1.3 GOAL OF STUDY
The importance of this study cannot be overstated, given the increasing scarcity of food items, the poor and insufficient implements used by farmers and other agro-based industries, and commercial banks’ inability to extend credit to customers due to repayment, security, and other issues.
The researcher believes that corrective measures should be made to overcome these difficulties, hence the study’s aims are as follows:
1.To determine the various conditions for obtaining agricultural loans for agricultural development.
2. Determine whether the government’s agricultural credit policy is being followed by both clients and banks.
3.To assess clients’ repayment capacity in order to assure early payback of permitted facilities, including interest costs.
4.To encourage farmers and business clients to seek agricultural loans for the expansion of their agricultural projects.
5.To promote mechanised farming as a result of such facilities, which may be used to purchase tractors and other agricultural input.
1.4 THE SIGNIFICANCE OF THE STUDY
The purpose of this research is to highlight the increasing scarcity of food items, the poor and inductor implements used by farmers, and the inability of commercial banks to give facilities to their customers due to repayment security and other challenges encountered by banks.
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