CHAPTER ONE

1.0          INTRODUCTION

Bank lending evolved from the beginning when the goldsmith discovered that only small proportion of the money kept with him to save was in fact required by the depositor at any point in time and that he could safely lend the rest to borrowers and charge interest thereon. Commercial Banks hinged their consistent existence in the profession on profit-making or profitability. Hence, it is chiefly regarded as aspect of a financial operation system with a very high-risk business. In definition, commercial banks are seen as financial institutions set up by an individual(s) and even the government for keeping and lending money to their respective customers with the view of making a profit from such transactions. The place of commercial banking in the national polity is so peculiar such that the banks engaging in commercial activities are very important in the achievement of most governmental, economic and fiscal policies objectives. One of the major aspects of the business of commercial banks is that of extending credit to other sectors of the economy for their smooth operation. The process of extending their credit is however known as “LENDING”

However, undertaking the lending function exposes the commercial banks to several risks, particularly credit risk, which is the risk that bank will lose either the whole of the principal of part of it or the interest thereof. Lending services by banks is being managed by the credit management portfolio of the bank. To ensure proper management therefore, credit management cannot be overemphasized. According to “PANDY” (2008) Credit Management can be defined as the procedure, steps and action taken in the loan recovery and lending a stated in the credit. Policy manual. Credit management concern itself with the formulation of credit policies with frame work of banks overall corporate objectives.