BACKGROUND OF THE STUDY
Credit in deeper perspective conates different definitions depending on angle on which it is being viewed. In an accountant, credit means financial benefit and also put in another way, having a corresponding relationship on a dual entry principles. To a banker it means financial accommodation, a type of financial facility, packaged, for the benefit of the deficit economic unit. In essence, it involves an allocation of finds. For example, chamber Dictionary define credit as sum placed at one’s disposal in the books of bank. This definition crystallizes the concept that when an account is in surplus position it liberty? Up to the limit of his funds. Therefore, when an arrangement is made between the bank and the borrower overdraws his balance, a form of bank credit has been allowed in which case, there is an obligation to repay such debt at a future date.
Relating this to Bank, credit means that Bank frequently uses part of its deposit in granting credit to his customers thereby affecting confidence in the integrity at customers (borrower) is to whom such loan and advances are made either by way of discounting bills or otherwise, to increase the borrower to increase in borrower purchasing power.
Credit is, therefore created by way of loans and advances or by discounting of bills and engaging in other investment securities normally oblige to the borrowers.
Financial institution ensures that there is enough stock of money to service the needs and aspiration of the economy. It also performs economic as of transferring money from areas of surplus economic units to deficit economic sector.
Credit management is regarded as a vital instrument in the management of banking industry especially as it affects the commercial banking system. Attention in this work would be focused on this area of endeavour. More so as to be one of the most neglected areas of management in most countries today (especially in the developing and underdeveloped nations of the world including Nigeria) it could therefore be said that the inherent problem as experience by banking sector today can be linked to the partial or total neglect of cannons of lending, by the officers of the bank, impact of government policy and customers attitude towards the entire spectrum of credit facilities.