CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND OF THE STUDY
In Nigeria commercial banking dates back to 1894 when the bank of British West Africa (BBWA) was established, since then, the general concepts of the Nigeria commercial bank has changed  and transformed in various degrees and dimensions, particularly, the growth in term of number has been quite phenomenon. For example, this development, it has increased to sixty – six (66) as at 31st December 1990 the number of commercial banks in the country. This was unexpected because various policies put in place so as to achieve a realistic and reliable exchange rate for Naira disrupted price levels. There was a multiplier and downstream effect which crystallized in an explosion of funding requirements in all economics endeavors. It was without doubt that the injection of fresh credit and increased key financial subsector are imperative for fuel realization of the economic reforms being pursued under the structural adjustment program (S.A.P) during the administration of the former head of state of Nigeria, General Ibrahim Badamosi Babangida in the year 1986 also liberalized banking business in nigeria.
Another reason for the increase in the number of banks in the widening of the sphere which banks could operate.
The general deregulation gave banks free hands to carry out more business and particularly the citification between commercial banking and merchant banking getting reign. Thus some of the service provided by Nigeria commercial bank includes:
The safe keeping of valuables for people such as will, shares and bonds certificates and other articles in sealed boxes as well as envelopes and receiving deposits of any kind and from customers and also making it available to them on demand.
It was therefore based on this background that the researcher wishes to ascertain and asses the constraints and prospects of loan recovery in Nigeria commercial bank using the first bank of Nigeria plc Ughelli branch as a case study. In organizing this empirical study both primary and secondary dates were used extensively. In primary datas, the datas were collected through telephone, interviews, questionnaire and observations while the secondary data were collected through telephone, interviews, questionnaires, and observation while the secondary datas were collected through textbooks, magazines, internet and annual report.
The core of the financial system in Nigeria is the commercial banks. They have the potentials to apply the full weight of their credit facilities for the development and growth of the country. Credit is seen as the blood stream of a business. It is the valued materials that oil the wheels of development. The situation of the country today demands the injection of healthy bank credit to effectively fasten the pace of growth. Haggot bank hart (1984) wrote that the basic best of effective and efficient (well functioning) financial system is its ability to finance credit needs which will contribute to economic growth.
Also concerning to bank of Japan publication (1973) commercial banks have contributed significantly to develop Japanese economy and is largely to the fact that they were able to have adequate accommodation of capital. In Japan, most of the funds being raised by business organizations is being supplied by commercial banks, this is done through loans to customers (borrowing from banks). This is not so in Nigeria because, the share holders of the commercial banks are not afraid.
Ejiofor P.N (1981) opined that shareholders of banks got much more worried about the rate of bad and doubtful debts in the bank’s financial book (statements). This is because the increases in bad and doubtful debts affect the rate of their dividence. From the foregoing, the constraints and prospects of loan recovery I Nigeria, commercial banks is therefore a serious problem as this virus have led to premature liquidation of banks that were very healthy herein lies the reasons why this study is being embarked upon.

1.3    OBJECTIVE OF THE STUDY
The objectives of the study are summarized as follows.
1      To ascertain the institutional arrangement used (utilized) by first bank of Nigeria Plc Ughelli in the process of its recovery activities.
2      To discover the identity the problems encountered with its customers.
3      To recommend some method that would be followed by the bank so as to enhance3 an efficient and effective loan recovery system.

1.4    RESEARCH QUESTIONS
1      Does first bank face any difficulty in its loan recovery?
2      It’s the institutional arrangements used by first bank of Nigeria Plc, Ughelli appropriate?
3      Does first bank of Nigeria Plc has any option to enhance effective loan recovery system?

1.5    SIGNIFICANCE OF THE STUDY       
Conclusively, it is envisage that the research finding would
1      Serve as a guide to the present and future investors in commercial banks not only in the irst bank of Nigeria plc, Ughelli branch.
2      Provides banks management as well as policy makers with a starting point in re-appraising some of their loan policies.
3      Draw the attention of regulation authorities to the need of standard policy of accounting with regards to loan and bad debts provision.
 
1.6    STATEMENT OF HYPOTHESIS
          HYPOTHESIS 1
H0:    First bank of Nigeria plc does not face any difficulty in its loan recovery exercise.
HYPOTHESIS 2
H0:    The institutional arrangement utilized by first bank plc, Ughelli branch in its loan recovery is not appropriate.
HYPOTHESIS 3
H0:    First bank of Nigeria plc does not have any option to enhance effective loan recovery system.
The institution focus will be limited to First Bank and Central bank of Nigeria. The findings from this institution could be technically extrapolated in the process of achieving at our conclusion and policy prescription.

1.8    DEFINITIONS OF TERMS
LOANS: This is the money that organizations such as bank lends and borrow to people or customers.
RECOVERY: This is the act of retrieving or getting back lost items.
COMMERCIAL: This process of making or involved to make profit.
Bank: The Nigeria banking Act of 1969 defined a bank as any persons who carried on banking business and includes commercial banks, an acceptance house, discount house financial institutions and merchant bank. In other words, a bank is a financial institution where money, properties and other valuables are kept for safety.
Commercial Bank: May be seen as a financial institution set up for keeping and lending money to people owned by individuals organization or government for the aim of making and maximizing profit.
BAD DEBTS: A debt is said to be bad when there is no hope of recovering it.
Good Debts: A debts is said to be good when there is every hope of recovering it.
LENDING: This is the act of giving out money to reliable customers.