Full Project – The constraints and impact of thrift and loan cooperative society in higher institution

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CHAPTER ONE

 1.0  INTRODUCTION

The Constraints and Impact of Thrift and Loan Co-operative Society in Higher Institution. This is a study of Federal Polytechnic Thrift and Loan Society, Ltd Nekede Owerri.  The study systematically revealed the process of the constraints and impact of credit in co-operative organization in Imo south Local government of Imo State. It highlights the process of credit administration in co-operative, which contract, supervision of credit and credit recovery.

The information is regard to this project will come from Imo south local government area of Imo. The research as this project will be design in such a manner that will suit the purpose of this project. With this reason a logical procedure will be used to give a balance report and to avoid bias information.

The type and nature of this research study will determine the type and source of data to be use however in the accomplishment of this study, both primary and secondary source of data will be used. During the course of this study interview will be conducted, this will help to analyze the data.

The nature of the research topic the characteristics of the population, the time as well the distance which shall be covered shall determine if the population sample is going to be used in this research. This research of this study will be limited to the constraints and impact of credit in the cooperative.

1.1  BACKGROUND OF STUDY

Nigerian agricultural co-operatives and rural development bank limited (NACRDB) is a new bank which came into being following the merger of the defunct Nigerian agricultural and  cooperative bank (NACP), people’s bank of Nigerian (PBN) and the risk assets of the family economic advancement by the federal government of Nigeria. Therefore, your deposit is 100% secured.

1. Purveyance of affordable credit facilities to the less privileged segments of the Nigerian society who cannot readily access the services of other conventional banks
2. Acceptance of savings deposit from customers and the repayment of same with accrued interest when due.
3. Provision of opportunities for self employment in the rural areas, thereby reducing rural to urban migration
4. Enhance government efforts in the diversification of the productive base of   the national economy
5. Inculcation of banking habits of the grassroots level of the Nigerian society
6. Promotion of capacity building through the provision of relevant training and advisory services
7. Fostering an accelerated growth and development of the agricultural rural economy.
8. Encouraging the formation of co-operative societies at all levels
9. End-well schemes for the civil servant at salary earners.

Because of the uniqueness of the bank in the Nigeria economy, the federal government has just restructured the bank towards economy growth of the nation. Being a deposit-taking bank, the bank has the following products:

1. Savings account
2. Target saving scheme

• Salary account

1. Co-operative account
2. People’s start up loan scheme, PSLs
3. Fixed deposit account

• Government revenue account

Since the objective of the bank include giving financial support to customers business the bank operates the following schemes:

1. Micro-credit scheme (not more than N250, 000) conditions.
2. You need to have an account relationship with the bank for 60 days (for farming business) or 100 days (for non farming business).
3. Have 30% of the loan amount as deposit for non agric business (the deposit attracts interest).
4. 10% deposit for agric-loan below N100, 000
5. 20% deposit for agric-loan below N250,000 but above N100,000

Provide how guarantors

1. Simple interest rate on loan at 8% per annum
2. 7% per annum for cotton production
3. Re-payment period is 12 months
4. For civil servants, salary accounts are acceptable
5. 2. Lending: This is done in bulk loan scheme for financial and credit-lending institutions like banks, cooperative bodies etc.
6. Establish account relationship with the bank
7. 30% of the loan as deposit
8. Collateral security or government guarantee

WHO CAN PARTICIPATE  

1. Individuals: Traders, artisans, civil servants and farmers
2. Groups and institutions: Cooperative societies, associations, bank etc.
3. Limited liability companies: Small, medium, and large scale farming, marketing, agro processing companies.

NACRDB changes name to Bank of Agriculture

The management Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) Ltd has announced a new name for the bank. The institution will now be known as the bank of Agriculture Limited (BOD). This follows the requisite administrative and regulating approvals from supervisory agencies. According to the banks management, this is the first step towards a complete rebranding of the bank. This new corporate identify for the institution will be unveiled soon.

The managing director / ECO of the bank, Dr. Mohammed K. Santauraki says that this is in line with the effort of the new management to reposition the bank into becoming an effective and sustainable finance institution. He recalled that a assumption office on 27^th September, 2010 he laid out his teams repositioning agenda, which he anchored a three direction points (TDPs; a tripod of modernization, institutional capacity enhancement, and refocusing on the bank’s key mandates, enhancement of information technology and upgrade of working environment aid tools as elements of the modernization program.

Refocusing the bank, according to the BOA chief activities, would entail reorganizing the bank and improving its processes to ensure effective delivering of agricultural and rural finance services on a sustainable basis to support the president’s national economic development agenda towards achieving the country’s vision 20:20:20. He further emphasized the need to improve access to finance, and effectiveness of agricultural and rural development of view of the importance of these sectors to national development, noting that the sector is too important to be left to private sector finance institutions alone. It 60% agriculture is the largest employer of labour and also the largest contribution to the national GDP in Nigeria (42%). However, agricultural credit as a percentage of banks total credit in Nigeria was 1.4% years. That is practically 65 of the population getting only 2.4% of the national finance pie”.

There lies the challenge which the bank of agriculture is repositioning itself to bridge. Bank of agriculture is the nation’s apex agricultural and rural finance institution. It is government owned (CBN) 40% and federal ministry of agriculture. The bank was incorporated as Nigerian agricultural bank (NAB) in 1973 and 1978, was renamed Nigerian agricultural and cooperative bank (NACB).

Subsequently in 2006, it was merged with the people’ bank of Nigeria (PBN) and look over the risk assets bank of family economic advancement programme 9FEAP) to become Nigerian agricultural cooperative and rural development bank limited, a name that has always be considered to long and unwieldy.

1.2    STATEMENT OF PROBLEM

Co-operative society mobilizes credit to their members through the saving of the members. It has been observed that they are inefficient in mobilizing and utilization of credit. Many problem lead to their inefficient mobilization of credit they are:

1. Inadequate fund for bank purpose
2. Inefficient management of loan
3. Faulty loan policy, which may sometimes emphasize credit worthiness of borrowed, and not the viability of project.
4. Credit co-operation are mere money activities without proper organization procedure and planned systematic arrangement.
5. Absence of regular maintaining and supervision of loan

The above problems need to be solved for the effective performance of co-operative.

1.3  OBJECTIVE OF THE STUDY

The situation of co-operative is nothing to a rate, they will wind-up.

• In view of the above, solution to be design for his problem. Therefore the objective of the area under review.
• To find out various problems being encountered by this co-operative which stand to hinder their effective and efficient performance agent of credit.
• Finally to make recommendations aid suggest problem solution that will enable this society overcome the problems so as to function very well.

1.4  RESEARCH QUESTIONS

From the fact that credit is very important in any business activity, therefore the study is focused on finding relevant solution to the following research questionnaire:

1. What is the purpose of credit administration in the cooperative society of federal polytechnic Nekede?
2. How effective credit administration to co-operative in federal polytechnic Nekede?
3. What problem is encountered in the administration of credit in co-operative and what is the solution to this problems?

• STATEMENT OF HYPOTHESIS

Hypothesis I

Ho: There is significant relationship between the   constraint and impact of credit co-operative        organization

Hi: There is no significant relationship between the       constraint and impact of credit co-operative        organization.

HYPOTHESIS II

Ho: The impact of credit cooperative organization has   significant       lead to availability of sources of fund to        co-operative    organization.

Hi:   The impact of credit cooperative organization has no     significance lead to availability of sources of fund to   cooperative organization.

1.6    SIGNIFICANCE OF THE STUDY

This study will assist the loan committee managers in there decision making as it concern credit policy and management of credit form of proper assessment of loan application proper supervision of credit and evaluation of project proposals. It will help the management to see the need to employ professional staff and lastly this study or findings will be of educational importance to the various universities, polytechnic and student of co-operative development in the various schools.

1.7  SCOPE OF THE STUDY

The research will limit this study of the constraints and impact of credit in co-operative organizations in federal polytechnic, the researcher intends to find out the available sources of fund to co-operative as well as the financial problem of co-operatives. The researcher will also find out the problems of credit administration and some factors militating against credit administration.

1.8    LIMITATION OF STUDY

In the course of accomplishing the study, the researcher were faced with the following problems:

1. Finance: There was no fund to travel from co-operative society to another, there was facility and transport was very high, the will hinder the researcher movement.
2. Time: The researcher will find it difficult to continue the researching work with the academic assignment dye to time constraint.

1.9     DEFINTION OF TERMS

For clarity purpose elimination of confusion of any kind are proper understanding of the study, the following definition of terms is necessary:

1. Credit: David W. Pearle defines credit as financing directly or indirectly the expenditure of other against future repayment. Such lending or financing is direct when a bank extends on overdraft facility to customers who use. It is indirect when a trader or producer supplies goods on credit.
2. Management: Administration or management is the act of attempting to achieve a stated objective by directing human activities in the production of goods and services. Management utilizes the land factory, office, machinery and other facilities at the disposed of the organization in most effective, efficient manner. Bob-Igwe (1993:39)
3. Organization: Organization is an economic system in which individuals are free simply or collectively to own capital and undertake design to protect the interest of individual Hanson (1974:218).
4. Effective: Hornby A.S define effective in the oxford advance learner’s dictionary as having an effect able to bring about a result intended powerful in effect and that is efficient performance.

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Full Project – The constraints and impact of thrift and loan cooperative society in higher institution