ABSTRACT

Banking all over the World has some fundamental nature which centres on risk taking activities and funds intermediation between the surplus and deficit economic units of the economy. However, its main business is maturity transformation, which is defined as borrowing short and lending long. As stated by Kanu and Okezie (2005 p.1 16). Nwankwo (1990 p.138) in his own opinionated that the foundation for doing this is the probability that he (the bank) will not be called upon at any one to redeem all his obligations provided he discharges prudently. Management of his affairs is centrally based on the management of its loan portfolio to ensure adequated liquidity and profitability. According to Nwankwo (1990 p. 112), the,importance of the loan portfolio is derived from the functions lending perform for banks. It is, for instance, the highest earning assets in the bank's balance sheet. It contributes materially to the bank's achievement and fulfillment of the objectives of profitability by providing a higher return than other financial assets. It helps the bank management to satisfy the legal and other regulatory requirements hence helps the monetary authorities in attainment of its macro objectives. According to Kanu and Okezie (2005) refers 2 4 bank credit as the key element in the creation and maintenance of depositors' relationship, particularly with business firms, it is a vehicle through which bank management attempt to satisfy the credit needs of the community or other credit, markets the banks serve or intend to serve. According to them, most of the technical training the banker receives are heavily geared towards lending. This is because when it is said that one is a good or an astute banker, what infact, it is meant that one is a shrewd lender-one who lends money safely and profitability. Despite the emergence of other avenue presently, historically, the major path to rapid professional advancement and high salaries as a bank employee was through credit administration.