CHAPTER ONE

INTRODUCTION

1.1)     BACKGROUND OF THE STUDY

             A commercial bank can be defined as a financial institution or company carrying on the biz of receiving monies other valuables as deposits from the public for keeping and for lending to the investors on short and medium term basis on which it charges interest such deposit or repayable on demand to the depositors or order. ADEKANYA(1993)

      The early commercial bank in Nigeria were established by the colonial Govt and mainly catering for the interest of the expatriates, thus (i) financing export trade and neglecting agricultural financing. The discriminatory attitude makes some Nigeria to establishing indigenous commercial banks could be found in the country which include union bank plc, first 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 faculties to customers, issuance  of letters  credit to worthy customers and fund transfer service  discounting of bills.  Etc.                                                                          Despite the amount  of loan being channeled to the agricultural sector for industrial development by commercial banks, the agricultural sector still suffers from some in he rent problems militating against the industrial and agricultural of the nations. And  there has been continuous shortage of basic food items in the nation as a result of lack of agricultural development.

            The prices of food items are always develop as result of limited yearly output of agricultural products. A huge sums of foreign exchange is spent annually on the important of   raw materials for local industries which would have been source locally, if the agricultural sector was full developed. Also farmers and other agro-base ventures are not motivated towards obtain agricultural loan facilities due to the banks stringent measure of loan appraised, disbursement &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 agricultural loan disbursement and repayment in Nigerian commercial banks in the there to look the factors that militate against the proper disbursement and repayment of such loan in other to revitalize the agricultural sector so as to be self sufficient in food production and for the economic development of the nation.

1.2              STATEMENT OF THE PROBLEM

The commercial banks, farmers and other agro based

industrials are faced with problem arising from the disbursement and payment of agricultural loans

       There is a problem of insufficiency of liquidityawardable to the commercial banks to  meet loan applications by prospective customers or farmers due to Govt policies on reserve requirement of commercial banks. The customers and farmers irritability in repaying the loan give to them also militate against the willingness of banks in agriculture loans. Sometime the security to be offered by customers for such loans become a problem as some customer found it difficult to offer a collateral security for such loans which even tonality 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 loans was extended during a period of cash sequence in the economy commercial banks often finds it difficult to extend agricultural loans to credit worth customers due to scarcity of liquidity. These and other problems, the research intend to investing in this study.

1.3              OBJECTIVES OF THE STUDY

          The purpose of this study can be over emphasized because of the increasingly shortage of food items, poor and inadequate implements being used by farmers and other agro-based industries and the inability of the commercial banks is extending facilities to customers due to repayment, security and other problem being encountered by bank.

      The researcher is of the opinion that corrective measure to taken overcome these predicaments therefore the objectives of the study are:

1.To identify the various criteria for obtaining agricultural loan towards the development of agricultural.

2. To identify whether the agricultural credit policy of the government is being adhered to by both the customers  and banks.

3.To check the repayment capabilities of customers so as to ensure prompt repayment of approved facilities including interest charges.

4.To motivate farmers and corporate customers in souring agricultural loan for expansion of their agricultural project.

5.To encourage mechanized farming as a result of such facilities which could be used for the procurement of tractors and other farming input.

1.4        SIGNIFICANCE OF THE STUDY

              The study of this, is to emphasize on the increasing shortage of food items, poor and inductor implements  being used by farmers and the inability of the commercial banks in extending facilities to their customers due to repayment security and other problems being encountered by bank.

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