Banking operation is very important in the stating of any economy in the functions of commercial bank in an economic system is the transfer of funds from the surplus unit to the deficits units. The surplus unit provides the fund needed to the deficits unit for investment purposes, this is essential for economic growth of any country. The commercial bank are the intermediaries between the demand side and the supply side.
Banks in the process of performing their code of financial intermediaries between surplus unit and deficit unit create deposit when a bank give out loan to a customer account with the amount involved. The credit to the customers account which has become now deposit which is allowable to the bank for further lending to their prospective borrowers.
The ability of a commercial banks to grant loan is on the level of deposit of hours generated and the legal reserve requirement supposed by the central bank A bank earns a return for performance of the role mobilizing is important as well as the bad debt account due to the numerous reason which may includes the likely death of a borrows, possible illegal diversion of funds, poor state of the economic, not all the loans granted by banks to if customers are rapid when due, such problems on loan and advances are classified as bad debt and doubtful debt.
This has two major concern to both management and shareholders, but debt are less as bank and therefore, are capable of reducing the returns that the shareholders and contributions of the bank to economic and social development of the country.
1.1 STATEMENT OF THE PROBLEM
The study investigated into the management of debt in Union Bank, it had been discovered that several factors affects the decision of the bank management in the numerous factors considered are the time factors, the nature of the business of the company involved and its management team and the type of industry in to which the company’s falls.
A study concern itself with the examination of low factors like non products financial management, natural disorder, prevailing economic difficulties which has caused many countries to operate below capacity and other have affected management of bad debt.
1.2 AIMS AND OBJECTIVES
The bank is a business enterprises aim of maximization of profit payment of handsome dividend to the shareholders and contributing if quote to the economic growth of the nations.
The main objectives of this research topic is to defall the bad debt activities through the strategies they are using in order to minimize the rapid growth of debt to become bad, effort would be made to draw out the impact of bad debt on the entire banking industry including the staff, customer and marketing activities, there by consisting a major constrains on the achievement for their desire objectives.
The project is also to touch the effort of prudential guide lines on bill debt and categories of bank debt, study the process of credit appraisal identify the major causes of bad and doubtful debt analysis their effects and offer suggestions on the minimization and effective management of bank debt in union bank.
1.3 SCOPE OF THE STUDY
The scope of the research is created on the business operating and working on the union bank of Nigeria plc, which give on insight explanation on management of bad and doubtful debt in the loan and advances department and the effect of bad debt on the profitability of bank.
1.4 SIGNIFICANT OF THE STUDY
The significant of this study is firstly its ability prefer solution to the problem of fraud.
Secondly if expose it expose student to information and builds them in the act research data and information collection and bold project writing.
Thirdly, if serve as literature material to prospecting researcher for future researcher lastly if serves as an alert to the regulation body of financial institution on that, if fraud is not urgently death with it might just parallax the economy totally not spanning the banking section, as they say a study in time saris nine. The significance add if depended upon as a source of possible solution to the problem of fraud
1.5 LIMITATION OF THE STUDY
The study faced its highest limitation in the area of interview most of the bank officials were relevant to grant us their time for an interview based on the excuse that they were very busy. This study also faced limitation in the length given for the research project, which we consider as insufficient.
1.6 RESEARCH METHODOLOGY
These are suggested solution to research questions which during the cause of this research study will be tested.
These suggested methodology will guide us in the approach to be applied this study.
1) Moi: There is significant relationship between the menace of bad debt and the distress of Nigeria commercial banks
2) Mo: There is significant relationship between the menace of bad debt and the distress Nigerian commercial banks
1.7 RESEARCH QUESTIONS
Question one: what are the causes of bad debt in union bank
Question two: what effect does the inefficiency of bank regulation body have on the existence of bad debt in Union Bank.
Question three: what relationship exist between bad debt
Question four: what impacts does bad debt have on the regarded growth of the Nigeria Economy.
1.8 DEFINITION OF TERMS
1) Auditor: this is an independent professional accountant employed by a company (shareholders) to audit the financial state meant of the company.
2) Teeming and lading: Using the money received from one debtor to clear the account of another debtor whose money was previously misappropriate company in order to establish its authenticity and lunchernty to standard
3) Boflo bank and other financial institutions decree
4) Dual central system: A system of two central system in which one serious as a check on the lapses of the other
5) Lending: act of granting money out on credit
6) Security: These are financial documents issued by the government of the public to source for funds implying on state of indebtedness of the government to the holders of such document
7) Questionnaire: A set of reposting system of evaluation via the use of pretend form of question
8) Credit: Granting the use of possession of goods without immediate payment.
9) Internal control: System of controlling actual performance against standards through the use of presented mechanizes.
10) Bankrupting: A declaration by a court of law that an individual or company is insolvent (can not meet its debts on the due date)
11) Share holders: There are members and owners of a company via their ownership of the share the company
12) Payroll: this is a record card that shows that gross wages, tax deductible and the net wages payable to an individual workers.
13) Remuneration: Reward for labour and services
14) Orgardgram: this is the structural arrangement in an organization
15) FEM: foreign exuding market
16) CBN: central bank of Nigeria.