CHAPTER ONE

• INTRODUCTION

The banking system is an important sector of the economy because it acts as an agent for mobilizing funds from those who wish to deposit their money and allocating the same to those who want to borrow, thus facilitating the efficient functioning of commercial and .manufacturing activities.

The credit allocation and control policies are required by the bank and other financial in particular development activity. Control of advances are usually targeted at reducing unwise spending and promoting industrialization with a view to reviewing the economy through generation of employment to promote development.

Government gives a directive by constituting a forum of control for bank to recover all loans advances disbursed on reduction basis so that funds available would be channeled to more preferred sectors specifically agro-based, agro-alhed, agro-chemicals industries and exports. Most of the times, the control of credit at the head office and at the branch levels are essentially. On the same basis. The only difference is that the head office and regional administration are completely detached form the scene, and this takes a more realistic approach in appraising proposals with limited and defined power, whereas as a branch often makes a hurried assessment, which in most cases is completely full of sentiment, pressure and influences. As stated above, the banking and financial sector plays the role of intermediary. The sector mobilizes funds from small and big savers who have no immediate need for such funds and provided such funds for users who are basically business entrepreneurs and investors who need such funds.

These surplus funds owners may deposit their funds in the banking sector in the form of investment and they are generally referred to ultimate savers of funds. On the other hand, the users are the business entrepreneurs and individual who have brilliant ideas on how to create additional wealth in the economy, but lack the necessary capital to execute their plan and concretize their ideas from the above this group is referred to as the ultimate users of funds. Ti must be noted that one of the basic objectives of any bank is the generation of profit, which is realized through the banks ability to attract new deposits while retaining the old ones and putting them into profitable use. Such deposits funds in the opinion of the management is not immediately required for everyday working needs of the depositors and  so it  must be channeled appropriately to places where they are needed for economic development.

However, for any bank to achieve its objectives it must be able to manage or control its credit portfolio effectively. If the spate of bad debt now engulfing the banking industry is to be abted, these speculative tendencies on the part of the customers and passive approach by lending officers towards credit control like administration process require a process of action, analysis and follow up.

• BRIEF HISTORICAL BACKGROUND OF FIRST BANK OF NIGERIA PLC

First bank of Nigeria plc was founded by Alfred Jones, a shipping magnate form live pool, who started the business of banking in Lagos with emerging of the African banking corporation (ABC) established in 1891. it was first incorporated with the name. Bank of British west African (BBWA) as a limited liability company in London on March 31st 1894 having its head office in Liverpool, started business of banking with a paid – up capital of twelve thousand pounds stipulated ($12,000) in 1957, the name was changed form Bank of Nigeria Ltd.

In 1979 and 1991, the bank of Nigeria changed to first Bank of Nigeria Ltd, and first Bank of Nigeria Ltd, and first Bank of Nigeria Plc” respectively. First Bank is having the largest network of branches in Nigeria. Today it has one of the largest portfolios of diversified loans and credit facilities to various sectors of the economy in the country. Lending is the main business of first Bank of Nigeria plc, in this process of lending money is created in a way of loans and advances usually disbursed to customers with interest and a sties pulsated terms of repayment