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 nonexistence 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
1. Consistent increase in deposit amount
2. Excessive account activities in relation to type of account, that is, high turnover
with constant daily
balance.
3. 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
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CASE STUDY OF SIX SELECTED MICRO FINANCE BANKS IN A
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4. A pattern of daily deposit made to cover cheque received for payment on the
current day and
finally
5. Frequent purpose of the customers related to company or other banks

OTHER QUANTITATIVE CREDIT MANAGEMENT TECHNIQUE

This involves the control through loan disbursement and other drawn down
conditions. Olalusi
(1989) argued that no loan should be disbursed to the customer when necessary
agreement forms have
not been duly completed by the customer or the security document have been
signed yet.
Osiayemia (1981) maintained that there are dangers Inherent in providing a
personal or corporate body
with much or two little fund at a given moments. The loan disbursement is therefore
linked with the flow
cycle of the customers hence an appropriate disbursement arrangement must be
applied. Also to be
applied are certain empirical disbursement criteria and consideration is specific type
of credit such as
housing loan, agricultural loans and over draft for specific purpose.
SECURITY CONSIDERATION IN DISBURSEMENT INCLUDES
Loans should not be disbursed until customers satisfied all security
formalities. The danger of
allowing him to drawn down the loan while he is yet to comply with the security
documentation cannot
be over emphasized. When drawn down has not been effected, customer is over
willing to cooperate to
finish the required documentation which is not always the case once he has the
money.
No disbursement should be allowed against anticipating approvals. Valid approvals
needs to be attained
from the approving authority before disbursement is allowed because jumping the
gun in loan
disbursement is dangerous as the banks position maybe jeopardized by opting it in
a fail accomplished
position.
Finally all disbursement should pass through the customers current accounts.
DANGER SIGNALS ON BAD AND DOUBTFUL DEBTS

Dangers signal are usually not lacking through sometimes they descend like sudden
foundation without
prior notice with experience instinct for sensing and spotting troubles.
The following points will serve as a useful question
1. Excessive rigidity in the accounts for examples difficulty in obtaining cover for
cheque, dividing
monthly saving low or nonexistence turnover on the account.
2. Evidence of delay in payment of trade accounts
3. Long debt in producing financial statement particularly audited account
4. Heavy borrowing from other sources
5. Inability to meet loan installment
6. Increase in number of cheque being jopped at customer instances or returned
from lack of funds
7. Poor quality of current assets
8. Failure to honour banks, inculcate to come for discussion particularly in the
customers used to
make enforcement calls at the Bank in the first.
CAUSES OF BAD DEBTS IN MICRO FINANCE BANKS
In the Nigeria context, there has been increasing trends of bud and doubtful debts
in the banks and
bankers and their shareholders and also the government officials are begging to
show concern on this
issues by making pronouncements insisting on the need to correct the situation.
However, for effective coverage on organized reviews the causes of bad debts in
micro finance banks are
as follows