CHAPTER ONE
INTRODUCTION
1.1Background of the Study
We all are aware of the fact that financial company does not produce goods,but they help in clearing payments for the participants in the economy. Banks being a financial institution,is engaged in the the acceptance of deposit, granting of credits (by means of loans,overdraft) and other transactions such as the discount of bills,foreign exchange etc.
loans being one of the transactions being done in the bank are a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially does receive an amount of money from the lender, which he has to pay back, usually but not always in regular installments to the lender. This service is generally provided at a cost referred to as interest on the debt. A loan is of the annuity type if the amount paid periodically (for paying off and interest together) is fixed.
Since computer in business has risen above the detailed clerical automation, to providing decision-making assistance at a highest level of management. The ability of computer to store, retrieve and analyze data at tremendous speed at low cost has made it imperative for large corporation and industry to depend on its accuracy and efficiency in its operation. With the environment at fast pace, viewing this development as an opportunity to increase their influence and control the data processing of the organization. Business carried out in some organization is now totally dependent on the accurate operations of computers. The banking industry is no exception to the capabilities the computer provides especially in the area of loan and advances, which in no small measures contribute to the financing of individuals and business and to enhance economic development.
The need for a computerized loan assessment in Nigeria banks is to provide prompt, efficient and better quality services for customers and to ensure competitiveness in banks. A bank can be defined as a financial institution that engages in acceptance of deposit of money, granting of credits (loans, overdraft, etc) and other transaction such as discounting of bills, foreign exchange etc. one of the basic functions of a bank is to issue out loans to competing users. There are two types of loans that are being issued out to customers; they are secured loans and unsecured loans.
1.2 Statement of the Problem
Loan assessment from the data processing point of view has generated many problems, which include the following.
- Vital documents stand the risk of exposure to ill motivated hands, hence rendering the authenticity of such document to be questionable.
- Operations ranging from routine task to highly sophisticated task must be carried out in banks there by necessitating a considerable programming effort to ensure that all requirements are properly taken care of.
- File assessing, maintenance, updating and referencing operation requires a day-to-day basic activity.
The time between time of generating and producing of actual hardcopy of the documents can create room for falsification. Since the document move from hand to hand and from office to office.Input and output operations are normally performed in large quantity and these constitute a considerable burden on the personnel and equipment.
1.3 Aim and Objectives of the Study
The aim of this project is design and implement a computer based loan assessment system. The objectives of the study are:
- To implement a system that aids in assessing client worthiness, provides complimentary electronics assistance to the loan officer, through availability of computerized information system.
- To implement a system that increases the speed of data processing as to enable the system execute various services given to their numerous customers.
- To develop software that would help the computation of sales made on daily basis.
- To implement a system for computerizing the loan calculation.
1.4 Scope of the study
The scope of this study was narrowed down to storage of client personal data, calculation of interest on loan, and credit-rating. They study could not go beyond the above limit due to the Confidentiality of the bank as Banks are known to maintain high policy on some confidential documents.
1.5 Significance of the Study
This study is designed to make the computer system to increase its speed, work effectively and efficiently. It will also help in accessing and securing client’s information through the use of password, and also backlog of job will be a thing of the past.
1.6 Limitations of the Study
The researcher faced several challenges in the course of this study. Some of the factors which acted as an impediment or constraints to the progress of this project work include:
- Lack of Documented materials: It was difficult to start the project initially because reference materials at my disposal are limited.
- Financial constraint is another factor that limited the researcher in owning out this project effectively.
- Confidentiality of the bank as Banks are known to maintain high policy on some confidential documents/information and do not readily give them out.
1.7 Definition of Terms
Automation: This is an electronic or computer based application that is used to execute a task.
Client: This refers to a customer that needs the services of a bank.
Collaterals: This refers to the properties which is normally pledge as a guarantee for the payment of loan.
Credit Period: This is the length of time a credit customer has to pay money in full.
Credit Rating: This is the rating of a client’s income to a given duration.
Credit Terms: This states the condition under which a client is required to pay a bank for a loan extended to it.
Data: These are raw facts collected from different source with-out a meaningful conclusion.
Data Processing: it is a method of collecting, manipulating and disseminating data.
Loan: The sum of money that is lent to somebody of an organization by a bank or financial institution.
Personal Loan: This is a type of loan collected by an individual for personal effect.
Secured loans: These are loans backed by a pledge of some specific valuable items, known as collateral, which can be seized by the lender should the borrower fail to repay the loan.
Unsecured loans: These are loans that require no collateral, or security. In this type of loan, the bank relies on the general credit record and the earning power of the borrower.
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