COVER PAGE
REFERENCES
APPENDIX 87
BIBLIOGRAPHY 85
CHAPTER ONE
A commercial bank can be defined as a financial institution or company carrying on the business of receiving monies other valuable as deposits from the public for safe-keeping and for lending to the investors on short and medium term basis on which it charges interest such deposits or repayable on demand to the depositors or order. Adekanya (1993).
The early commercial banks in Nigeria were established by the colonial government and were mainly catering for the interest of the expatriates, thus financing export trade and neglecting agricultural financing. This discriminatory attitude prompt some Nigerians to establishing indigenous commercial banks, today a lot of foreign and indigenous commercial banks could be found in the country, which include Union Bank PLC. First Bank PLC., Wema 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 facilities to customers, provision of safe custody services, advisory services, issuance of letters of credit to worthy customers, fund transfer service discounting of bills, purchase of industrial securities on behalf of their customers etc.
Despite the amount of the loans being channeled to the agricultural sector for industrial development by commercial banks, the agricultural sector still suffers from some inherent problems militating against the industrial and agricultural of the nations.
There has been acute shortage of basic food items in the nation as a result of lack of agricultural development. The prices of food items are always escalating as a result of limited yearly output of agricultural products. A huge sum of foreign exchange is spent annually on the importation of raw materials for local industries, which would have been sourced locally, if the agricultural sector were fully developed.
Also farmers and other agro-based ventures are not motivated towards obtaining agricultural loan facilities due to the bank’s stringent measure of loan appraisal disbursement and 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 on agricultural loan disbursement and repayment in Nigeria commercial banks in order to look the factors that militate against the proper disbursement and repayment of such loans in order to revitalize the agricultural sector so as to be self sufficient in food production and for the economic development of the nation.
The commercial banks, farmers and the other Agro-based firms 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 formers due to government policies on reserve requirement of commercial banks. The customers and farmer irritability in repaying the loan given to them also militate against the willingness of banks in agricultural loans. Sometimes the security to be offered by customers for such loan becomes a problem as some customers found it difficult to offer a collateral security for such loans which may even tenalty 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 loan was extended. During a period of cash squeeze in the economy, commercial banks often finds it difficult to extend agricultural loans to credit worthy customers due to scarcity of liquidity. These and other problems, the researcher intends to investigate in this study.
The purpose of th
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