COMMERCIAL BANKS LENDING POLICIES IN NIGERIA AND THEIR IMPLICATIONS
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COMMERCIAL BANKS LENDING POLICIES IN NIGERIA AND THEIR IMPLICATIONS
1.1 BACKGROUND OF THE STUDY
Back credit and lending functions, as we are aware, evolved from a rather humble beginning as a result of the discovery made by the goldsmith some time ago,
that only a small proportion of the money kept with him for security purposes was indeed required by the depositors at any one time and that he could safely lend the rest to borrowers and charge interest on it.
The banking habit that the later inherited thought that just approximately nine(9) to ten (10) percent of the bank deposits at any given time were consequently demanded by depositors.
However, the role of commercial banks in pooling funds for the more surplus economic units to the deficit units of the country’s economy is recognised as their primary job.
Banks have recently been regarded as an economic growth machine because they accomplish this resource allocation role by mobilising and channelling resources from savings surplus economic units to savings deficit economic units.
In this capacity, they contribute to the acceleration of economic activity in various sectors of the economy, hence improving the level of utility and desires of individuals and corporate bodies.
As the preceding job is fulfilled, they will become more involved in the development of the economy because their raw material (money) is where other sectors and sub-sectors of the economy spin.
Furthermore, commercial banks have proven and are likely to remain the dominant financing intermediaries in Nigeria, accounting for over 520 of the financial system’s resources to the economy and appearing to be more than units or sub-sectors capable of influencing the course of development.
This is why, despite the economy’s deregulation, banking remains one of the most tightly managed or regulated industries in Nigeria.
The central bank of Nigeria (CBN) stated in monetary amendment guideline circular No 21 of January, 1987, that in order to enhance the development of financial position and achieve a realistic resource allocation,
the following change was effected all control on interest rates were then removed in line tooth the emphasis on deregulation of the economy the second condition without in order to serve as a sign to the desired direction of interest rate changes,
the minimu This has gone even farther to demonstrate the importance of commercial banks in the growth of the country’s economy. This is because, despite the fact that the entire economy has been deregulated. Banks are still constantly monitored and required to follow the monetary authorities’ policies.
1.2 STATEMENT OF THE PROBLEM
Poor banking awareness (particularly in rural regions) and under-litches are stifling economic progress in Nigeria, as in most other developing countries throughout the world. This dreadful tendency is the outcome of a bad and underdeveloped banking system,
which has long been identified. Actually, a key shortcoming of the West African Currency Board (WACB) in advocating the foundation of the Central Bank of Nigeria in 1958 was the failure to adopt beneficial bank lending policies and implications.
Internal autonomy was achieved in 1937, and another committee was established. During this time, the federal government retained the services of another bank of England financial specialist, Mr. J.B. Loynes,
whose proposal resulted in the establishment of the central bank of Nigeria by the central bank of Nigeria decree of March 17, 1959.
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