DISBURSEMENT OF LOAN AND ITS RECOVERY PROBLEM IN DEPOSIT MONEY BANK IN NIGERIA
(A CASE STUDY OF FIRST BANK OF NIGERIA)
 	
By:
AZEEZ MUIZ OLAMILEKAN
HND/23/BFN/FT/0368

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF BANKING AND FINANCE, INSTITUTE OF FINANCE AND MANAGEMENT STUDIES, KWARA STATE POLYTECHNIC, ILORIN.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN BANKING AND FINANCE

MAY, 2025
CERTIFICATION
This project has been read and approved as meeting the requirements for the award of Higher National Diploma (HND) in the department of Banking and Finance, Institute of Finance and Management Studies, Kwara State Polytechnic Ilorin.

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DR. OLOWONIYI A.O					DATE
(Project Supervisor) 		

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MRS. OTAYOKHE E.Y					DATE
(Project Coordinator) 

	

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MR. AJIBOYE W.T.					DATE
Head of Department (H.O.D)	

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DATE
(External Examiner)

DEDICATION
I dedicate this project to Almighty Allah, whom none deserve to be worshiped expect Him. And to my adorable and lovely parents.

ACKNOWLEDGEMENT 
I express my profound appreciation, grateful to the Almighty Allah for his guidance, protection, wisdom and mercy throughout this course of my study. I wouldn't have made it this far without his favor, mercy and blessings. My gratitude also to the noble prophet Muhammad (Sallahu Alayhi Wasalam).  May Almighty Allah blessing continue to be with him.
My sincere and special appreciation goes to my parents MR. AZEEZ NASIRUDEEN TOYIN and MRS. IYABO AKINWANDE KARIATU and special greetings to my beautiful and loving mother for her unwavering support, love, prayer, and encouragement throughout my academic journey, her guidance and sacrifices have been instrumental in shaping me into the person I am today .my prayer to god is to keep my mom alive in good health to eat the fruits of her labour.
I also want to thank my lovely brothers, AZEEZ FAWAS, AZEEZ WARIS, and AZEEZ KOREDE. They have been the best support system ever. Also to my beautiful sister USMAN RASHIDAT MOTURAYO, my best adviser, and also special thanks to Dada Joshua my best motivation.
Thank you all for your motivation, understanding and patience, your love and support means the world to me.
My sincere appreciation goes to my wonderful mom who has been supportive and encouraging in person of ALHAJA AKINWANDE IYABO KARIATU, thank you for the support ma. My sincere appreciation goes to my wonderful Grandma who has been supportive and encouraging in person of ALHAJA AROPO, thank you for the support ma 
My gratitude goes to my special and able supervisor in person of DR OLOWONIYI A.O for his support and advice, useful suggestions, comments and easy attention over this successful project.
My appreciation also goes to all my departmental lecturers that impacted knowledge in me since I have started my program in this institution, Thank you for all the lectures and advice may god almighty reward you accordingly (AMEN)
My sincere appreciation goes to my brothers and sisters, AZEEZ FAWASI, AZEEZ WARIS AZEEZ KOREDE, USMAN RASHIDAT, Thank you all for your support and encouragement on me since I started my program jazakumullahu kharan
Much gratitude is owed to the person who help me financially along the academic journey of mine in person of ARONDE BARAKAT MOJISOLA may the blessings and mercy of almighty Allah continue dwell on her and bless her with a lovely and good husband.
I am greatly in debt if I fail to acknowledge a friend like brother who has been very supportive of me financially and academically In persons of AZEEZ AMINAT ANIKE and  DADA JOSHUA .Thank you for being there for me all through my program also my peoples BALIQEES ,RASHEEDAT, FADEKEMI AND ABIMBOLA AND BROTHER AY jazakumullahu kharan .
My gratitude also goes to my friends (the best gifts Kwarapoly gave me )A friend who supported me throughout my program in persons of BENNARD ,GLORY AND OPEYEMI, Biggest B Thank you so much may we all succeed academically and financially bijahi kunfayakun 
Lastly to my friends, ABEBI ,OLUWAKEMISOLA ,AISHAT,ROQEEBAT, SAMSON, NOFISAT, HOMOLARA, AWWAL AKA BROKEN MY GUY, IMRON,  AZ, KILLA FARIDAT ,KAFFY ,KAOSARAT ,FATIMAH ,IYANUOLUWA, MARIAM ,KEHINDE, B Best, KOLA,YUSUF Thank you all for your care along the academic journey Jazakumullahu kharan.
Also my greeting to my lovely girlfriend, NASIRAT BABATUNDE DAMILOLA  
Also acknowledging my whole course mate may we all succeed academically and financially. Also Jazakumullahu kharan for everyone who contributed one or two things along my academic journey.
Thank you very much.

TABLE OF CONTENTS
Title Page									i
Certification									ii
Dedication									iii
Acknowledgment								iv
Table of Content								v
CHAPTER ONE
1.0	Introduction								1
1.1	Background to the Study						1
1.2	Statement of the Problem 						3
1.3	Research Questions							3
1.4	Objective of the Study 						4
1.5	Research Hypothesis 							4
1.6	Significance of the Study						5
1.7	Scope and Limitation of the Study					5
1.8	Definition of Terms							6
1.9	Plan of the Study							7
CHAPTER TWO
2.0	Literature Review							8
2.1	Conceptual Review							8
2.2	Theoretical Review							20
2.3	Empirical Review							21
2.4	Gap in Literature							24
CHAPTER THREE
3.0	Research Methodology						25
3.1	Introduction to Methodology						25
3.2	Research Design							25
3.3	Population of the Study						25
3.4	Sample size and Sample Techniques 					25
3.5	Method of Data Collection						26
3.6	Method of Data Analysis 						27
3.7	Limitations to Methodology						27
CHAPTER FOUR
4.0	Data Presentation, Analysis and Interpretation 			28
4.1	Data Presentation							28
4.2	Data Analysis 								36
4.3	Data Interpretation 							37
CHAPTER FIVE
5.0	Summary, Conclusion and Recommendations 			39
5.1	Summary of Findings							39
5.2	Conclusion								40
5.3	Recommendations							40
	References								42

CHAPTER ONE
INTRODUCTION
1.1	Background of the Study
The disbursement of loans by Deposit Money Banks (DMBs) in Nigeria is a critical function aimed at promoting economic development and supporting various sectors, including agriculture, small and medium-sized enterprises (SMEs), and personal consumption. Among the key players in this sector is First Bank PLC, one of the leading banks in Nigeria. However, despite the significant role of loans in fostering economic growth, many banks, including First Bank PLC, encounter substantial challenges in recovering these loans. High default rates, weak enforcement of credit terms, and ineffective recovery strategies contribute to the accumulation of Non-Performing Loans (NPLs), which, in turn, negatively affect the financial health of the bank.
The loan disbursement process involves several stages, including credit assessment, approval, and fund release, each designed to ensure that only creditworthy applicants receive loans (Eze & Okoye, 2019). Despite these measures, many banks in Nigeria, including First Bank PLC, face persistent challenges in ensuring that borrowers meet their repayment obligations. The inability to recover loans effectively increases the bank’s exposure to credit risk, ultimately affecting its ability to provide new loans and maintain financial stability (Olawale & Akinlo, 2020). This problem is particularly pronounced in Nigeria’s volatile economic environment, where factors such as inflation, unemployment, and inconsistent government policies contribute to loan defaults (Adebayo & Aluko, 2021).
In recent years, the Nigerian banking sector has experienced a rise in non-performing loans, with the NPL ratio exceeding the regulatory benchmark of 5% set by the Central Bank of Nigeria (CBN, 2020). This trend indicates a growing concern about the effectiveness of loan recovery strategies. Studies show that inadequate collateral evaluation, insufficient monitoring of loan usage, and weak follow-up mechanisms significantly hinder banks’ ability to recover disbursed loans (Adegbite, 2022). At First Bank PLC, loan recovery is further complicated by the diverse profiles of borrowers, ranging from large corporate clients to small business owners, each presenting unique risks and repayment behaviors (Okoye & Eze, 2020).
The legal and regulatory environment also plays a crucial role in loan recovery efforts. According to Akinyemi and Fapohunda (2022), the slow judicial process and complex legal frameworks in Nigeria create significant barriers to enforcing debt recovery. In cases where borrowers default, banks face prolonged litigation, which delays the recovery process and increases operational costs. Furthermore, some borrowers exploit these legal loopholes to evade repayment obligations, further compounding the recovery challenges faced by banks like First Bank PLC (Eze & Okoye, 2019). To address these issues, banks must adopt innovative strategies such as loan restructuring, asset recovery programs, and the use of credit bureaus to track borrower behavior (Olawale & Akinlo, 2020).
Moreover, the internal policies and practices of banks significantly impact the effectiveness of loan recovery. Research indicates that banks with robust risk management frameworks and proactive monitoring systems tend to experience lower default rates and more efficient loan recovery (Adebayo & Aluko, 2021). At First Bank PLC, enhancing these internal processes through technology adoption, staff training, and customer engagement is essential to mitigate the risks associated with loan disbursement and improve recovery outcomes (CBN, 2020). Without continuous improvement in these areas, banks risk continued financial strain and reduced capacity to support economic development initiatives.
This study aims to examine the disbursement and recovery processes of loans at First Bank PLC, identify the key challenges in loan recovery, and propose strategies to enhance the bank’s recovery efforts. By doing so, the study will contribute to a better understanding of loan management practices in Nigerian banks and provide actionable insights for improving financial stability.
1.2	Statement of the problem
The disbursement of loans by banks, particularly First Bank PLC, has been followed by several problems in loan recovery. These issues include the high rate of default by borrowers, ineffective credit appraisal processes, inadequate monitoring mechanisms, and legal bottlenecks. The persistence of these problems has resulted in a rise in Non-Performing Loans (NPLs), which affects the liquidity, profitability, and overall stability of deposit money banks in Nigeria.
1.3	Research Questions
i.	What are the existing procedures for disbursing loans at First Bank PLC?
ii.	What factors are responsible for the failure of loan recovery in First Bank PLC?
iii.	How does the bank's recovery strategy impact its financial stability?
1.4	Objectives of the Study
The primary objective of this study is to examine the disbursement process of loans and the recovery challenges faced by First Bank PLC. The specific objectives include:
i.	To analyze the loan disbursement procedures adopted by First Bank PLC.
ii.	To identify the factors contributing to the non-repayment of loans by borrowers.
iii.	To evaluate the impact of ineffective recovery strategies on the bank’s financial performance.
1.5	Research Hypotheses
Hypothesis One 
H₀₁: There is no significant relationship between the loan disbursement procedures of First Bank PLC and the effectiveness of loan recovery.
H₁₁: There is a significant relationship between the loan disbursement procedures of First Bank PLC and the effectiveness of loan recovery.
Hypothesis Two 
H₀₂: Factors contributing to loan default do not significantly affect loan recovery in First Bank PLC.
H₁₂: Factors contributing to loan default significantly affect loan recovery in First Bank PLC.
Hypothesis Three 
H₀₃: Ineffective loan recovery strategies do not have a significant impact on the financial performance of First Bank PLC.
H₁₃: Ineffective loan recovery strategies have a significant impact on the financial performance of First Bank PLC.
1.6	Significance of the Study
This study is significant because it aims to provide insights into the loan disbursement and recovery process in Nigerian banks, with a focus on First Bank PLC. The findings will:
•	Help First Bank PLC identify weaknesses in its loan management process.
•	Assist regulatory bodies in formulating policies that improve credit monitoring and loan recovery.
•	Offer practical recommendations to borrowers to enhance their repayment behavior.
•	Contribute to the existing body of knowledge on banking practices in Nigeria.
1.7	Scope and limitations of the Study
This study focuses on the loan disbursement process and the challenges of loan recovery at First Bank PLC in Nigeria. It examines the procedures involved in granting loans, the factors leading to loan defaults, and how recovery strategies affect the bank’s financial performance. The research covers data from recent years to provide a comprehensive understanding of current practices and their effectiveness in managing loan-related risks.
The study is limited to First Bank PLC and may not fully reflect the practices of other deposit money banks in Nigeria. Access to confidential financial data and internal bank policies posed challenges, limiting the depth of analysis. Additionally, time constraints and the reliance on secondary data may affect the generalizability of the findings to the entire banking sector.
1.8	Definition of Terms
Loan Disbursement: The process through which a bank provides funds to a borrower after the loan application has been approved.
Loan Recovery: The methods and procedures a bank uses to collect or retrieve the principal and interest from borrowers who have received loans.
Deposit Money Banks (DMBs): Financial institutions licensed by the Central Bank of Nigeria to accept deposits from the public and offer credit services.
Non-Performing Loans (NPLs): Loans that remain unpaid for a specified period (usually 90 days or more), indicating a default by the borrower.
Loan Default: Failure of a borrower to repay a loan according to the agreed terms and condition.
Financial Performance: The overall financial health of an organization, typically measured by profitability, asset quality, and return on investment.

1.9	Plan of the Study
This study is organized into five chapters:
Chapter One (Introduction): This chapter provides an overview of the study, including the background, statement of the problem, research questions, objectives, research hypotheses, significance, scope, and limitations.
Chapter Two (Literature Review): This section reviews existing literature on loan disbursement and recovery processes. It includes a conceptual review, theoretical framework, and empirical studies relevant to the research.
Chapter Three (Research Methodology): This chapter outlines the research design, population, sample size, sampling techniques, methods of data collection, and analytical tools used to interpret the data.
Chapter Four (Data Presentation and Analysis): This chapter presents the collected data, analyzes the findings, and tests the research hypotheses to draw meaningful conclusions.
Chapter Five (Summary, Conclusion, and Recommendations): The final chapter summarizes the key findings, provides conclusions, and offers practical recommendations for improving loan disbursement and recovery processes at First Bank PLC.

CHAPTER TWO
LITERATURE REVIEW
2.0	REVIEW OF RELATED LITERATURE REVIEW
A comprehensive review of related literature is essential to understand the concepts, theories, and empirical studies surrounding loan disbursement and recovery challenges in Deposit Money Banks (DMBs) in Nigeria. This section is organized into three parts: conceptual review, theoretical review, and empirical review.
2.1	CONCEPTUAL FRAME WORK
2.1.1 Loan Disbursement Process in Deposit Money Banks
The loan disbursement process in Deposit Money Banks (DMBs) involves series of steps designed to ensure that credit facilities are provided to eligible borrowers while minimizing the risk of default. This process is crucial for the effective functioning of the financial system, as it enables banks to fulfill their intermediary role by channeling funds from savers to borrowers (Olawale & Akinlo, 2020). Loan disbursement typically begins with the borrower’s application, where the prospective client submits a formal request outlining the amount of the loan, its intended use, and other relevant details. According to Eze and Okoye (2019), this stage is critical as it provides the bank with preliminary information to evaluate the applicant’s financial capacity and repayment ability.
Once the application is received, the bank conducts a credit appraisal to assess the borrower’s creditworthiness. This involves a thorough examination of the applicant’s financial history, income level, collateral, and previous credit records (Adebayo, 2021). First Bank PLC, like many other Nigerian deposit money banks, employs a structured risk assessment model to evaluate the probability of default and determine whether the applicant meets internal lending criteria (CBN, 2020). A comprehensive credit appraisal not only protects the bank from potential losses but also ensures that credit is extended to individuals and businesses capable of meeting repayment obligations (Adegbite & Aluko, 2022).
Following the appraisal, the bank’s credit committee reviews and approves qualified loan applications. This committee typically consists of senior officials who evaluate the loan’s compliance with regulatory requirements and the bank’s internal credit policy (Olawale & Akinlo, 2020). For instance, in First Bank PLC, the approval process involves multiple layers of checks to ensure due diligence is observed. If approved, the bank and the borrower enter into a formal loan agreement, which outlines the loan amount, interest rate, repayment schedule, and legal obligations of both parties (Eze & Okoye, 2019). This agreement is a binding contract and serves as a reference point throughout the loan’s lifecycle.
The final step in the disbursement process is funds disbursement, where the approved loan amount is released to the borrower. Depending on the type of loan, disbursement may occur as a lump sum or in installments (Adebayo, 2021). Banks often monitor the use of loan funds to ensure that the borrower utilizes the credit for its intended purpose, reducing the likelihood of default. According to the Central Bank of Nigeria (2020), effective monitoring post-disbursement is essential for maintaining credit quality and ensuring the stability of the banking system.
Disbursement of loan is the principal business activity for most deposit money banks. The loan portfolio is typically the largest asset and the predominant source of revenue. Lending otherwise known as disbursement is the ability of bank to loan money on the promise that debtors will repay in future.
According to Adedoyin and Sobodun (1991 pg.12) “Lending is undoubtedly the heart of banking business. Therefore, its administration requires considerable skill and dexterity on the part of the bank management”. While a bank is irrevocably committed to pay interest on deposits it mobilized from different sources, the ability to articulate loanable avenues where deposits funds could be placed to generate reasonable income, maintain liquidity, ensure safety requires a high degree of pragmatic policy formulation and application.
The prudential guideline (1990) succinctly convey a more comprehensive definition of credit, it defines credit facility as the aggregate of all loans, advances, overdrafts, commercial paper bankers acceptances, bill discounted, usages, guarantees and other loss contingencies connected with a bank’s lending risks. Also the definition of credit proposed by the CBN Monetary policy circular (1992) agrees with the view above. Generally, we could conclude that credit includes all commitments by a bank that has risk exposure and that may result in financial loss to the bank. Mendel (1974) describes credit simply as the right of a lender to receive money in the future in return for his obligation to transfer the use of funds to another party in the interim. The facility is as old as man, though in the primitive society it was known as “Mutual aid”, because it was based on ancient customer of enduring substance of all members of the community. Lending therefore arises out of the need to bridge the gap between the surplus and deficit economic units such that the highest level of satisfactory function is performed by the financial institution notable among which are deposit money banks.
Furthermore, Acher and Ambose (2009) opine that deposit money banks are in business to make loans. They however, added that the loan should work out in such a way that it will not seriously endanger the loan portfolio and solvency of the bank. This view appreciate that though some dangers may arise, lending is and should be a major activity of deposit money banks. The techniques and complexities of lending have been changing with growth in the society.
2.1.2 Loan Recovery Process and Challenges
The loan recovery process in deposit money banks refers to the systematic approach taken to ensure borrowers repay loans in full and on time. Effective loan recovery is vital for the financial stability of banks, as loan defaults can lead to increased non-performing loans (NPLs) and threaten overall bank performance (Adebayo & Aluko, 2021). The process typically involves a series of steps, including monitoring, reminders, restructuring, legal actions, and, in extreme cases, asset seizure (Okoye & Eze, 2020). First Bank PLC, like other Nigerian deposit money banks, adopts a structured recovery mechanism to minimize default risks while ensuring the repayment of disbursed funds (CBN, 2020).
The loan recovery process begins with monitoring and tracking repayments. Banks maintain detailed records of repayment schedules and issue periodic reminders to borrowers through phone calls, emails, and formal letters (Adegbite, 2022). Regular monitoring allows the bank to identify early signs of default and address them promptly (Eze & Okoye, 2019). If a borrower falls behind on repayments, the bank typically initiates a soft recovery approach, which includes sending reminder notices and negotiating new repayment terms where necessary (Olawale & Akinlo, 2020). At First Bank PLC, soft recovery efforts are emphasized during the early stages of default to foster customer relationships while securing overdue payments.
If soft recovery efforts are unsuccessful, the bank may resort to loan restructuring. This involves renegotiating loan terms to make repayment more manageable for the borrower (Adebayo & Aluko, 2021). Loan restructuring could include adjusting the interest rate, extending the repayment period, or allowing partial payments (CBN, 2020). For instance, First Bank PLC frequently uses loan restructuring as a tool to support clients experiencing temporary financial difficulties while safeguarding the bank’s assets (Adegbite, 2022). However, if restructuring fails to yield positive outcomes, the bank escalates to legal recovery measures. This may involve taking legal action through courts to recover outstanding debts or enforcing collateral agreements (Olawale & Akinlo, 2020).
Despite these structured processes, loan recovery in Nigerian deposit money banks faces several challenges. One significant issue is poor credit assessment during the loan disbursement phase, which can result in loans being granted to borrowers with low repayment capacity (Okoye & Eze, 2020). Additionally, economic instability and inflation significantly affect borrowers' ability to meet repayment obligations, especially in volatile sectors like agriculture and small-scale businesses (Adebayo & Aluko, 2021). According to the Central Bank of Nigeria (2020), the increasing rate of unemployment and fluctuating business environments in Nigeria exacerbate loan repayment difficulties, making the recovery process more challenging.
Another challenge is the weak legal framework for enforcing loan recovery. Lengthy court procedures and inconsistent judicial rulings often delay the recovery of bad debts (Eze & Okoye, 2019). Furthermore, some borrowers exploit these legal loopholes to avoid repayment, leading to increased non-performing loans (Adegbite, 2022). For First Bank PLC, navigating the legal environment remains a substantial hurdle, especially when dealing with high-profile defaulters (Olawale & Akinlo, 2020).
Poor borrower attitudes also contribute to loan recovery challenges. Some borrowers view bank loans as free government money, leading to intentional defaults (Okoye & Eze, 2020). Additionally, lack of effective monitoring systems means that banks may fail to track loan performance adequately, allowing defaults to escalate undetected (Adebayo & Aluko, 2021). First Bank PLC has implemented more rigorous monitoring mechanisms in recent years, yet the sheer volume of loans and diverse borrower profiles make comprehensive tracking difficult (Adegbite, 2022).
2.1.3	The Nature of Loan and Advances Granted By Banks
Bank loan can be classified in various ways according to the class of people the loan is granted to. Thus, loan can be classified according to purpose namely;
1.	Personal loans
2.	Agricultural loans
3.	Bridging loans
4.	Industrial loans
5.	Probate loans
Loan as well can be classified based on the period of maturity. From this, we therefore have short, medium and long term loan. The short term loan does not exceed one year. Medium term loan last for only two to three years while the long term loan last for about five years.
1. Personal Loan:
This loan is normally for durable customer goods repair and decoration, rents, school fees, house renovation, purchases of car or other personal consumption or investment items. Such loan are usually for small sums and are often referred to as petty lending.
The banker must find out the purpose of the loan through discussion with the loan seekers, how much is needed by the customers and whether repayment could be made without much stress on the customers or the bank either. The reason for calling “personal loan” is because they are normally granted to enable individuals to purchase consumer durable goods e.g. motor cars, television etc. usually, security is not required for this type of loan. As frequently, this is built into the loan agreement as an insurance against non-payment, should the borrower die before repayment? Interest is charged ‘Up front’ that is when the loan is granted. Thus, interest is added to total amount which is repayable.
Once interest is fixed, the customer can be at a disadvantage if interest rates are reduced rationally. Alternatively, if during the life of the loan, interest rates are increase, he may benefit.

2. Agricultural Loan:
The agricultural sector plays a major role in the economic development of any country. Funds are disbursed on both short and long term basis for the purchase of seed, fertilizers, machinery, cattles etc.
Banks normally refuses agricultural loan because of its long gestation period and also because of poor harvest on account of weather influence. Also, the fact that farmer direct the loan for other purpose such as increase in the number of their wives in order to encourage banks to go into agricultural finance which is considered by the Agricultural credit guarantee scheme 2000.
In the 2002 budget, government promised to give subvention to states and to ensure that the federal government concentrated on agricultural planning. Nigeria Agricultural and co-operative Bank (NACB) plays a major role in agricultural loan disbursement, if necessary, some forms of security are obtained.
3. Bridging Loan:
When house-owners requires temporary finance in order to purchase a property at the same time as selling the house in which they live. It is often the bank that provides finance to purchase the new property and receives payment when the old property has been void. When this type of loan is required, the bank likes to see that the completion date of the sales and purchase contact are known as they have a solicitor’s undertaking that the proceeds of the sales will be delivered to the bank. Bridging loans are from the bank; point of view simply profitable and self-liquidating

4. Industrial Loan:
Moratorium is given under this loan which the customer is given time to set up and yielding before repayment is commenced. Industrial loan repayment normally depends on the production or survival of the company. If it cannot achieve its optimum production, the tendency to repay loan is doubtful.
5.  Probate Loan:
A probate loan is granted to an executor of a will when, in order obtain probate (i.e. the transfer of deceased’s assets to the executor). Capital transfer tax must be paid. The executor needing funds will go to the bank, show the manager evidence of the right to the executing a loan will be granted and the tax paid when probate is then granted.
2.1.4	Problems of Loan Default
Loan default arises as a result of debts due to creditor but for some inherent weakness the full or partial recovery is considered impossible from the bankers point of view, loan deposit (bad debit) are component of account receivable or credit granted to the customer of the bank but which cannot be recovered within the specified period, for one reason or the other.
2.1.5	Causes of Loan Default
Loan deposits are caused by variety of factors, some are controllable and other uncontrollable. Controllable factors are those that reflect overall bank credit policy as well as in adequate credit analysis loan strutting and loan documentation. Uncontrollable factors typically reflect adverse economic conditions, adverse changes in regulations, environmental changes surrounding the borrower’s questions and catastrophic events. While there is little that can be done to prevent uncontrollable variables. The following affects loan default;
1.	Bank related factors
2.	Customer related factors
3.	Uncontrollable factors
1. Bank Related Factor
A.	Lack of indepth knowledge of customer’s operation: Some banks grant credit to customers based on hazy knowledge of customers operations and personality. The practice usually leads to situations whereby loans are granted to customers who have neither the willingness nor the capacity to repay the loan.
B.	Executive Dependence on Financial Statements: The information contained in the financial statement of the customer serves as a tool for proper loan administration. He should not work on the statements on their face values neither or rather in-depth financial analysis of data is required for sound decision making.
C.	Connected Lending: some lending officers in the bank provide loans to their relations or related business without considering the basic principles of lending. These often lends to bad and irrecoverable debts of loan.
D.	Inadequate Project Monitoring: Incidence of bad and doubtful decision banks may be as a result of in ability to monitor and recover their loans due to lack of swell articulated and communicated loan policies to guide lending operation.

2. Customer Related Factors
A.	Inadequate Total Capitalization: Some businesses often run into problems shortly after beginning operation due to inadequate capitalization. Owners under estimated the cost of opening the doors for business and overestimated the speed with which they can turn out profit. By the time they recognize the problem, their capital had depleted and lenders refuse to extend additional credit.
B.	High Financial Operating Leverage: If a company has a large amount of outstanding debt and the high percentage of its total cost are fixed. It operate with a high degree of financial and operating leverage. These eposes the firm to substantial depreciation and maintenance expenses when sales decline. In both cases, his volatility of earning is high relative to changes in sales.
C.	Misconception of Bank loans: Some borrowers do not clearly understand the purpose of bank loans. They sometimes regard bank loans as windfall receipts and they very much unwilling to refund them.
D.	Loan Diversion: Diversion of loans purposes other than those for which they are granted most often leads to bad debt. This is because the expected cash flow cannot be granted to meet up repayment schedule.
3. Uncontrollable Factor:
A.	Economic Downtown: Many firms cannot operates profitability in a declining economic environment. This cost may be fixed because of high leverage, and their sales may deteriorate, if they are not market leaders. The resulting strains in cash flow impair the firm’s ability to repay the loans.
B.	Changes in Economic Policies: Changes in economic policies may affect the operation of a borrowing firm, and consequently the ability to honour loan obligations
C.	Natural Hazards: Some hazards such as war, desert  encroachment, locust invasion, fire, flood etc. may affects borrower’s capacity to repay the loan as and when due.
2.1.6	Effect of Loan Default
The overall effect would be a loss of confidence in the banking system. Other negative effects of default on loan repayments are:
i.	Loss to banks: The un-recovered loans constitute a very heavy loss on the part of the banks. When the debts are not paid, the banks have to write them off which sometimes has significant adverse effect on the bank operations.
ii.	Decline in Revenue: The interest loss adversely affects the bank major revenue. The main activity of the banks is the granting of loans and credit to customers. They charge interest on loans and this forms a major source of revenue for them. Failure to pay interest on loans means that the bank will lose substantial revenues
iii.	Limited Credit Creation Capacity: As bad debts increase, the capital of the bank decreases and the money available to the banks for lending becomes depleted, thereby hampering the capacity of banks to create credit.
iv.	Increased Overhead: When the debt for bad, the bank may resort its legal action to receive part of or the whole of the debt. The legal fee involved in most cases is usually very enormous. Regrettable, they may lose the case after spending the huge amount on litigation.
2.2	THEORETICAL FRAMEWORK
2.2.1	Loan Pricing Theory
Banks cannot always set high interest rates. Banks should consider the problems of adverse selection and moral hazard since it is very difficult to forecast the borrower type at the start of the banking relationship. If banks set interest rate too high, they may induce adverse selection problems because high-risk borrowers are willing to accept their high rates. Once these borrowers receive the loans, they may develop moral hazard behaviours or so called borrowers moral hazard since they are likely to take on highly risky projects of investment. From this reasoning, it is usual that in some cases we may not find that the interest rate set by banks is commensurate with the risk of the borrowers.
2.2.2 Credit Risk Theory
The Credit Risk Theory, developed by Merton (1974), suggests that loan defaults arise due to uncertainties in a borrower's ability to repay. This theory emphasizes the importance of effective credit assessment, risk management, and continuous monitoring to minimize loan default risks. According to Eze and Okoye (2019), applying Credit Risk Theory in loan disbursement helps banks identify high-risk borrowers and implement strategies to mitigate potential losses.
2.2.3	Financial Growth Theory
This theory was developed by Berger and Udeli (1998). According to them, as a business malwares over the years, its financial obligations and financial options metamorphose having more information available to the public, According to them, firms that are smaller, younger and possess more ambiguous information must depend on initial internal funding trade credit, or a type of financial called angel finance. (Angel finance is one that occurs when an individual or organization provides a limited amount of financial backing for a startup business with more favourable repayment plan). As the time grows, it qualifies for acquiring both venture capital and midterms loans as sources of both intermediate equity and intermediate debt respectively. Further aging of the firm mates it to become bigger and less informational murky. This thus qualifies the firm to have access to both equity and long term loans as a source of both long term equity and long term debts respectively.  
2.2.4 Agency Theory
Jensen and Meckling (1976) introduced Agency Theory, which explains the conflicts between bank managers (agents) and shareholders (principals) in loan management. This theory suggests that ineffective loan recovery can arise when managers prioritize short-term gains over long-term stability (Akinyemi & Fapohunda, 2022). To address this, banks like First Bank PLC should adopt performance-based incentives and robust internal controls (CBN, 2020).
2.3	EMPIRICAL REVIEW
Adeusi et al (2013) focused on the association of lending risk management practices and bank financial performance in Nigeria using a secondary data from 10 banks and for four years reported an inverse relationship between financial performance of banks and doubtful loans, capital asset ratio was found to be positive and significant. Similarly, the higher the managed funds by banks, the higher the performance. Hence, it recommends that there is a need for banks to practice prudent risk management in order to protect the interest of investors.
(Owojori et al, 2011) used records obtained from liquidated banks in his findings records showed that 60 out of the 115 banks he used were distressed and had non-performing loans of 67% of their total loans. It worsened to 79% in 1996, 82% in 1997 and by December 2002, 35 of the distressed banks licenses were revoked by the central Bank of Nigeria (CBN). It is recommended that banks should put in place both prevention and resolution measures which emphasizes the need of credit screening, loan survellence and loan review functionaries both at individual banks and in the Central Bank of the country.
Ahmad and Ariff, (2007). Conducted a comparative study of some key determinant of lending risk associated with deposit money Banks in developing and developed economics. The findings showed that it is important for banking systems that offer multi-products and services to be properly regulated. And it recommends that Banks must maintain proper liquidity in order to be able to carry on their basic function of intermediation.
With reference to the studies by Altman (1989) and Altman and Suggitt (2010), the mortality approach is applied. It must be noted that the mortality approach was applied to measure the percentage of bonds or loans that defaulted n years after origination. The application of mortality to loan recovery rates is, to the best of our knowledge, novel. It examines the percentage of a bad and doubtful loan that is recovered n months after the default date. This methodology is appropriate because the population sample is changing over time. For some default loans, those of June 1995, we have a long recovery history (66 months), while for the ‘2000’ loans in default, we have an incomplete history of recovery. The actuarial-based mortality approach, based on the KaplanMeier estimator (Greene, 1993) adjusts for changes over time in the size of the original sample.
Similar to Carey (1998), Asarnow and Edwards (1995), Carty and Lieberman (1996), Hurt and Felsovalyi (2018) and La Porta et al. (2013) the Cumulative Recovery Rate at time T, CRRT, represents the proportion of the initial default loan that has been repaid (in present value terms) T periods after default. Note that these authors report only the total cumulative recovery rate over a long (unidentified) period, whereas we, adopting the Altman mortality-based approach, report the extent of cumulative recovery over time.
A study by Olawale and Akinlo (2020) analyzed loan disbursement practices in Nigerian banks and found that poor risk assessment and weak internal controls contribute to rising NPLs. Their research emphasized the need for automated credit evaluation systems to improve accuracy and efficiency. Similarly, Adebayo and Aluko (2021) highlighted that banks using standardized credit policies and technology experience lower default rates and better loan recovery outcomes.
Okoye and Eze (2020) investigated the impact of legal frameworks on loan recovery in Nigerian banks. Their findings revealed that ineffective judicial processes and borrower resistance significantly hinder loan recovery. They recommended policy reforms and enhanced bank-customer communication to address these issues. Additionally, a study by Adegbite (2022) indicated that economic instability and weak collateral enforcement are major contributors to loan recovery challenges at First Bank PLC.
Akinyemi and Fapohunda (2022) examined the relationship between loan recovery and financial performance in Nigerian DMBs. Their study concluded that high NPL ratios reduce profitability, limit credit supply, and increase operational costs. They emphasized the importance of proactive loan monitoring and legal reforms to enhance recovery efficiency. CBN (2020) similarly reported that banks with effective credit administration frameworks experience better financial stability and customer trust.
2.4 GAPS IN LITERATURE
Despite extensive research on loan disbursement and recovery in Deposit Money Banks (DMBs) in Nigeria, several gaps remain unaddressed. Many studies, such as those by Olawale and Akinlo (2020) and Adebayo and Aluko (2021), focus primarily on the general causes of loan default and recovery challenges across the banking sector. However, there is limited empirical research specifically addressing the unique loan disbursement practices and recovery strategies employed by First Bank PLC. Additionally, most existing literature emphasizes the financial impact of Non-Performing Loans (NPLs) on bank profitability while neglecting operational challenges, such as internal inefficiencies, inadequate technology adoption, and regulatory compliance issues (Eze & Okoye, 2019).
Another critical gap is lack of recent studies that reflect the evolving economic and regulatory environment in Nigeria. For instance, few studies account for the influence of post-COVID-19 economic disruptions on loan repayment patterns and how banks like First Bank PLC have adjusted their recovery strategies. Furthermore, there is insufficient exploration of the effectiveness of legal frameworks and customer relationship management in improving loan recovery outcomes (Akinyemi & Fapohunda, 2022). This study aims to bridge these gaps by providing a comprehensive analysis of loan disbursement processes, identifying key factors contributing to loan recovery challenges, and evaluating the impact of these challenges on the financial performance of First Bank PLC.
CHAPTER THREE
RESEARCH METHODOLOGY
3.1	Introduction to Methodology
The methodology section outlines the research design, methods, and techniques adopted to achieve the study’s objectives. This study examines the disbursement of loans and the recovery challenges faced by First Bank PLC. A well-structured methodology ensures the collection of accurate and relevant data, facilitating objective analysis and interpretation.
3.2	Research Design
The research design used for this work is survey design. Here, group of people were studied by collecting and analyzing their data. These groups of people were selected from the population to represent the population sample.
This is a field survey type of research, supported by research works
3.3	Population of the Study
One simple way to capture the concept of population is the perspective of temporary. In these sense, population comprised all the elements of particular group. The population used for this study is based on the number of staff in First Bank (One hundred staff) comprising of administrative manager and other.
3.4	Sample Size and Sample Techniques
The sample size will be obtained using the Taro Yemeni Formular stated below.
		n =	
Where:	
	n =	Sample size
	N =	Population size
	e =	Level of error
	I =	Mathematical constraint
The level of error of 0.05 was chosen by the researcher
Therefore;
		n =	
		n =	
		n = 80
3.5	Method of Data Collection
Information was gathered through primary and secondary source of data collection. The primary source constituted the major source of due to the responses to the questionnaire that was distributed to the staff of the bank. The secondary sources were from textbooks, journals and write-ups of some scholars. The method of data collection was structured questionnaire which are distributed to the staffs of the bank to get at facts and figures as regards to nature of loan defaults, those that pays promptly and other relevant questions.

3.6	Method of Data Analysis
This is a descriptive report mainly aiming to depict the loan approval process and monitoring techniques of deposit money Banks. The data gathered from both primary and secondary sources were arranged orderly to get a clear pictures of Deposit money banks loan management regarding disbursement process and monitoring. The study includes both qualities and quantitative analysis of loan and its recovery problems. Based on the observational information I have also tried to evaluate and analyze the problems involved in various phases of the loan disbursement and recovery status.
3.7	Limitations of the Methodology
There are some limitations to the study, these limitation are mentioned below:
•	Bank is a sophisticated business sector, so bank do not interested to provide confidential data.
•	Time is one of the important limitation of this study.
•	Sometimes collection of primary data is not easy enough or time consuming
•	Another limitation of this study is Bank’s policy of not disclosing some data and information for obvious reason, which could have been very much useful.
•	Sometimes employees were very busy to give their valuable time.
•	Lack of experience in making extensive research is one of the limitations to the study.
•	Sufficient records and publications as well as up to date information are not readily available.

CHAPTER FOUR
DATA PRESENTATION, ANALYSIS, AND INTERPRETATION
4.1 Data Presentation
Section A: Demographic Data of Respondents
Table 4.1.1: Gender Distribution
Gender	Frequency	Percentage (%)	
Male	42	52.5%	
Female	38	47.5%	
Total	80	100%	
Source: Field work Analysis, 2025
The table shows a fairly balanced gender distribution among the respondents, with a slight majority being male (52.5%).
Table 4.1.2: Age Distribution
Age Group	Frequency	Percentage (%)	
18–25 years	16	20.0%	
26–35 years	28	35.0%	
36–45 years	24	30.0%	
46 years above	12	15.0%	
Total	80	100%	
Source: Field work Analysis, 2025
The majority of respondents (65%) are within the age range of 26–45 years, indicating mature and working-class individuals.
Table 4.1.3: Educational Qualification
Qualification	Frequency	Percentage (%)	
SSCE	8	10.0%	
OND/NCE	20	25.0%	
HND/B.Sc	36	45.0%	
M.Sc/Ph.D	16	20.0%	
Total	80	100%	
Source: Field work Analysis, 2025
The majority (45%) of respondents hold HND/B.Sc degrees, showing a well-educated sample group.
Section B: Main Questions (Likert Scale)
Table 4.1.4: First Bank follows a structured procedure in loan disbursement
Response	Frequency	Percentage (%)	
Strongly Agree	20	25.0%	
Agree	30	37.5%	
Neutral	10	12.5%	
Disagree	12	15.0%	
Strongly Disagree	8	10.0%	
Total	80	100%	
Source: Field work Analysis, 2025
A majority (62.5%) of respondents agree that First Bank has a structured loan disbursement process.
Table 4.1.5: The criteria for loan approval at First Bank are clear and well communicated
Response	Frequency	Percentage (%)	
Strongly Agree	18	22.5%	
Agree	25	31.3%	
Neutral	14	17.5%	
Disagree	15	18.8%	
Strongly Disagree	8	10.0%	
Total	80	100%	
Source: Field work Analysis, 2025
Over 50% believe loan approval criteria are communicated, but a considerable portion remains neutral or disagrees.

Table 4.1.6: Poor credit assessment is a major cause of loan default
Response	Frequency	Percentage (%)	
Strongly Agree	28	35.0%	
Agree	26	32.5%	
Neutral	10	12.5%	
Disagree	10	12.5%	
Strongly Disagree	6	7.5%	
Total	80	100%	
Source: Field work Analysis, 2025
A strong majority (67.5%) agree that poor credit assessment leads to loan default, suggesting a weak risk management system.
Table 4.1.7: Ineffective recovery strategies have affected the bank’s financial stability
Response	Frequency	Percentage (%)	
Strongly Agree	24	30.0%	
Agree	30	37.5%	
Neutral	10	12.5%	
Disagree	10	12.5%	
Strongly Disagree	6	7.5%	
Total	80	100%	
Source: Field work Analysis, 2025
Nearly 68% of respondents believe that loan recovery issues directly affect the financial performance of the bank.
Table 4.1.8: Loan applicants always provide genuine collateral documents
Response	Frequency	Percentage (%)	
Strongly Agree	22	27.5%	
Agree	26	32.5%	
Neutral	12	15.0%	
Disagree	10	12.5%	
Strongly Disagree	10	12.5%	
Source: Field work Analysis, 2025
The majority (60%) of respondents agreed or strongly agreed that loan applicants provide genuine collateral documents, while 25% disagreed or strongly disagreed. This indicates moderate confidence in collateral documentation authenticity.
Table 4.1.9: Customers often divert loans from the intended purpose
Response	Frequency	Percentage (%)	
Strongly Agree	30	37.5%	
Agree	28	35.0%	
Neutral	8	10.0%	
Disagree	10	12.5%	
Strongly Disagree	4	5.0%	
Source: Field work Analysis, 2025
A significant portion (72.5%) believe customers frequently divert loans, indicating a potential 
Table 4.1.10: The bank frequently reviews borrowers’ creditworthiness
Response	Frequency	Percentage (%)	
Strongly Agree	18	22.5%	
Agree	30	37.5%	
Neutral	16	20.0%	
Disagree	10	12.5%	
Strongly Disagree	6	7.5%	
Source: Field work Analysis, 2025
About 60% of respondents agreed that First Bank frequently reviews credit worthiness, but the presence of 20% neutral and 20% disagreement suggests room for improved scrutiny.

Table 4.1.11: First Bank’s loan recovery efforts are proactive and consistent
Response	Frequency	Percentage (%)	
Strongly Agree	20	25.0%	
Agree	28	35.0%	
Neutral	12	15.0%	
Disagree	12	15.0%	
Strongly Disagree	8	10.0%	
Source: Field work Analysis, 2025
A majority (60%) find First Bank's recovery efforts proactive, but with 25% expressing disagreement, it indicates inconsistency in practice or effectiveness.
Table 4.1.12: Legal action is usually effective in recovering loans
Response	Frequency	Percentage (%)	
Strongly Agree	16	20.0%	
Agree	24	30.0%	
Neutral	20	25.0%	
Disagree	12	15.0%	
Strongly Disagree	8	10.0%	
Source: Field work Analysis, 2025
Just half of respondents see legal action as effective, while 25% are neutral. This indicates mixed opinions, suggesting that legal recourse may not always yield timely results.
Table 4.1.13: Loan defaulters are usually penalized appropriately
Response	Frequency	Percentage (%)	
Strongly Agree	14	17.5%	
Agree	22	27.5%	
Neutral	20	25.0%	
Disagree	14	17.5%	
Strongly Disagree	10	12.5%	
Source: Field work Analysis, 2025
A combined 45% agreed with appropriate penalties for defaulters, while 30% disagree. The high neutrality suggests unclear or inconsistent enforcement of penalties.
Table 4.1.14: High interest rates contribute to loan default
Response	Frequency	Percentage (%)	
Strongly Agree	26	32.5%	
Agree	30	37.5%	
Neutral	10	12.5%	
Disagree	8	10.0%	
Strongly Disagree	6	7.5%	
Source: Field work Analysis, 2025
A significant 70% of respondents agreed that high interest rates contribute to loan defaults, suggesting that the bank's interest rate policies might be a contributing factor in recovery challenges.
Table 4.1.15: Economic conditions affect customers’ ability to repay
Response	Frequency	Percentage (%)	
Strongly Agree	28	35.0%	
Agree	30	37.5%	
Neutral	10	12.5%	
Disagree	6	7.5%	
Strongly Disagree	6	7.5%	
Source: Field work Analysis, 2025
A clear 72.5% of respondents agreed that economic conditions play a significant role in customers’ repayment ability, indicating external factors are a major challenge for loan recovery.

Table 4.1.16: First Bank provides adequate monitoring after disbursement
Response	Frequency	Percentage (%)	
Strongly Agree	18	22.5%	
Agree	26	32.5%	
Neutral	14	17.5%	
Disagree	12	15.0%	
Strongly Disagree	10	12.5%	
Source: Field work Analysis, 2025
While 55% agreed that monitoring after loan disbursement is adequate, a significant portion (27.5%) disagreed or strongly disagreed, indicating that post-disbursement monitoring could be a major area for improvement.
Table 4.1.17: Poor loan documentation affects recovery efforts
Response	Frequency	Percentage (%)	
Strongly Agree	24	30.0%	
Agree	30	37.5%	
Neutral	12	15.0%	
Disagree	8	10.0%	
Strongly Disagree	6	7.5%	
Source: Field work Analysis, 2025
A strong 67.5% agreed that poor loan documentation hampers recovery efforts, highlighting the importance of improving documentation practices for more effective loan management.
Table 4.1.18: Loan recovery officers are adequately trained
Response	Frequency	Percentage (%)	
Strongly Agree	22	27.5%	
Agree	28	35.0%	
Neutral	14	17.5%	
Disagree	10	12.5%	
Strongly Disagree	6	7.5%	
Source: Field work Analysis, 2025
While a majority (62.5%) believe recovery officers are well-trained, 20% disagree, indicating potential training or skill gaps that could affect the bank's ability to effectively recover loans.
Table 4.1.19: There is a correlation between non-performing loans and the bank’s financial loss
Response	Frequency	Percentage (%)	
Strongly Agree	30	37.5%	
Agree	28	35.0%	
Neutral	10	12.5%	
Disagree	6	7.5%	
Strongly Disagree	6	7.5%	
Source: Field work Analysis, 2025
A significant 72.5% agreed that non-performing loans are directly linked to financial losses, demonstrating the critical impact of loan defaults on the bank’s financial health.
Table 4.1.20: The bank’s loan recovery strategies need improvement
Response	Frequency	Percentage (%)	
Strongly Agree	26	32.5%	
Agree	32	40.0%	
Neutral	8	10.0%	
Disagree	10	12.5%	
Strongly Disagree	4	5.0%	
Source: Field work Analysis, 2025
An overwhelming 72.5% of respondents believe that the bank's loan recovery strategies require improvement, highlighting a key area for enhancement to ensure better recovery outcomes.

4.2 Data Analysis
The data analysis for this study focuses on assessing the respondents' opinions regarding the loan disbursement and recovery processes at First Bank PLC, specifically looking into the effectiveness of these processes and the challenges faced by the bank. From the results, several key insights were drawn.
Firstly, a majority of respondents (over 60%) agreed that First Bank’s loan disbursement processes are efficient and well-structured. However, the presence of a significant percentage of neutral and disagreeing responses suggests that there may be areas within the process that need attention. Additionally, many respondents emphasized the importance of reviewing borrowers' creditworthiness, with 60% agreeing that the bank frequently reviews this aspect.
When analyzing the loan recovery process, it was clear that a large portion of respondents (60-70%) felt that the bank's recovery efforts were proactive but inconsistent. This indicates that while First Bank has some strategies in place, the enforcement and follow-through on these strategies may not be uniform or effective in every case. Respondents were also divided on the effectiveness of legal actions in recovering loans, with 50% expressing doubts on its success. Furthermore, the role of high interest rates in contributing to loan defaults was supported by 70% of the respondents, underscoring the financial burden these rates may place on borrowers, potentially leading to defaults.
Finally, a significant proportion of respondents (72.5%) indicated that the bank's loan recovery strategies need improvement, highlighting the urgent need for better practices and policies in this regard. This analysis underscores that while the bank has a framework for disbursement and recovery, there is still substantial room for improvement in both areas.
4.3 Data Interpretation
The interpretation of the data reveals a clear picture of the challenges and strengths associated with First Bank PLC’s loan disbursement and recovery practices. The data suggests that while the bank has structured systems in place for loan disbursement, these systems are not without their flaws. Although many respondents agreed that loan disbursement processes are efficient, the considerable number of neutral and negative responses indicates that some aspects of the process may still be cumbersome or not fully transparent to borrowers. It would be important for the bank to explore areas where these processes may be streamlined or clarified for better borrower experience.
The recovery process, however, seems to be the most problematic area. The fact that a majority of respondents felt that recovery efforts were inconsistent suggests that while First Bank may have systems in place, their application may not be as robust or frequent as required. The division in opinion about the effectiveness of legal action also points to a broader issue in the enforcement of repayment terms, which is a crucial element for loan recovery. A potential area for improvement could involve strengthening legal frameworks or adopting alternative dispute resolution methods to ensure faster and more effective recovery.
Moreover, the data indicates that external factors, such as high interest rates and adverse economic conditions, play a significant role in loan defaults. The bank’s loan recovery efforts could benefit from a more adaptive approach that takes these factors into account. The bank should also reconsider its current interest rate policies or offer more flexible repayment terms to alleviate the financial burden on borrowers.
In conclusion, the findings from the data suggest that while First Bank has made significant efforts in loan disbursement and recovery, improvements in both the review of creditworthiness, monitoring of loans, and recovery strategies are essential to mitigate the high rate of non-performing loans and enhance the bank’s financial stability. Addressing these challenges could contribute to improved financial health for the bank and greater confidence among its customers.

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 	Summary of Findings
This study examined the loan disbursement and recovery processes at First Bank PLC, with a particular focus on the challenges encountered in recovering loans and their impact on the bank's financial performance. The research aimed to assess the procedures for disbursing loans, identify factors contributing to loan defaults, and evaluate the effectiveness of recovery strategies. Through a structured questionnaire distributed to 80 respondents, the study gathered data on various aspects of loan management, including credit appraisal, disbursement procedures, monitoring mechanisms, and recovery efforts. The findings indicated that while the bank has established frameworks for loan disbursement and recovery, there are significant challenges, especially in the recovery phase, where the bank's strategies were perceived as inconsistent and ineffective by many respondents.
The study revealed that high interest rates, poor loan documentation, and inadequate post-disbursement monitoring were major contributing factors to loan defaults. Additionally, the impact of external economic conditions on borrowers' ability to repay loans was highlighted as a significant issue. The analysis also showed that a substantial portion of respondents believed that the bank's loan recovery strategies needed improvement. The research suggested that strengthening credit appraisal processes, enhancing monitoring efforts, and revising recovery strategies could improve the bank's loan recovery performance and mitigate the high levels of non-performing loans. Ultimately, the study emphasized the need for First Bank PLC to refine its loan management practices to enhance its financial stability and contribute positively to the broader Nigerian banking sector.
5.2	Conclusion
This study focused on examining the loan disbursement and recovery processes at First Bank PLC, with a particular emphasis on understanding the challenges that hinder effective loan recovery. The research findings revealed that while First Bank has structured systems for loan disbursement, several issues, including high interest rates, poor loan documentation, and inadequate monitoring, contribute to the high rate of loan defaults. Additionally, the study found that the bank's recovery strategies were often perceived as inconsistent, which further exacerbates the challenge of non-performing loans (NPLs). The research highlighted that external factors, such as economic conditions, also play a significant role in borrowers' inability to repay loans, further compounding the bank’s recovery efforts. Ultimately, the study underscores the need for improved loan management practices and the adoption of more effective recovery strategies to enhance the bank's financial health and stability.
5.3	Recommendations
Based on the findings of this study, the following recommendations are proposed:
i.	First Bank PLC should strengthen its credit appraisal system by adopting more rigorous methods for assessing borrowers' creditworthiness. This will reduce the likelihood of disbursing loans to high-risk borrowers and help prevent defaults. Additionally, continuous monitoring of loans post-disbursement is essential to ensure timely repayments.
ii.	The bank should consider revising its interest rate structure and offering more flexible loan repayment terms to alleviate the financial burden on borrowers, particularly in a challenging economic environment. This may help reduce defaults and improve recovery rates.
iii.	First Bank PLC needs to adopt more effective and consistent recovery strategies. This could involve strengthening legal frameworks for loan recovery, such as utilizing alternative dispute resolution mechanisms or better enforcement of loan contracts. The bank could also invest in training recovery staff to handle defaulting accounts more efficiently.
iv.	The bank should explore the use of digital tools and technologies to streamline loan disbursement, monitoring, and recovery processes. Digital platforms could offer real-time tracking of loan performance, thereby allowing the bank to identify and address potential defaults early on.
v.	To ensure the efficiency of loan disbursement and recovery processes, it is important for the bank to regularly train its staff on best practices, regulatory changes, and new recovery techniques. This will help staff stay updated on the latest trends and enhance their ability to manage loans effectively.

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