CHAPTER ONE   

CREDIT AND DEBIT MANAGEMENT  

The place of banks in national economy is a significant one, which acts as prime mover of the economic life of any nation. The importance and  significance of banks with respect to economic and social development of a nation cannot be under emphasized. Banks are known to perform many functions of deposits; mobilization and tending which is perhaps to most significant of their functions. Indeed the two prime functions portray banks as the agent who redirects funds from the surplus sector to the deficit sector while earning a comfortable margin surplus sector and then selvey for their services as the intermediaries. Whole deposit mobilization can be categorized as a relatively executing activity. Lending is essentially a logical follow up of deposit mobilization. The banks are responsible for the safety of funds entrusted to them, while also responsible for channeling the funds to the owners. The quality of the banks fund lending decision significantly  determines the banks ability to effectively play the role they have assumed. Apart from the fact that lending is a significant function of the banks. For the above reason, loans and advance have been found to constitute the largest proposition of the banks assets and assets possess the highest rate of return released to the other alternative investment. This is to determine the various techniques of methodologies of credit, the appropriate combination of these techniques so as to achieve success and minimize losses were not in banks credit and lending activities, this basic aim offers the opportunity to bridge the gap between savings and investment in the economy. Credit management also involves monitoring of operations of account at the branch bank have been taken for a ride in the past by “smart” customers, who give the impression that turnover was being done, granted by then, where all that was being done kite flying or cash recycling. Adekowary (1986) acquired that a customer who indulges in this practice usually have two or more accounts at two or more different banks or branches he draws a cheque on his account. The bank knowing fully well that there are no funds in that account with the bank, he then draws all the uncollected funds out at bank “P” and immediately deposits in bank ”x” another cheque drawn on non-existence funds in his account by bank “T”. This is a simple example of kiting, by this, it means a customer can fraudulently make use of bank funding without proper authority. Bank staff must therefore watch program operation on customers’ account closely and report unusual activities to their managers. However, some indication of kiting suspect as recently enumerated by Kotawa of (Savana Bank) as an experienced operating officer are; 

Consistent increase in deposit amount Excessive account activities in relation to type of account, that is, high turnover with constant daily balance. Depositors usually concern with daily states of account A pattern of daily deposit made to cover cheque received  for payment on the current day and finally Frequent purpose of the customers related to company or other banks