WHY BANK LOANS TURN BAD
Loan granted by banks are one form of credit. The other forms of credit are purchase on credit, personal loans hire and hire purchase contracts. When the five C’s are not followed by banks and others financial organizations the loans may turn bad.
It is necessary to first rate the debtor, is he creditor or they? Secondly, an alarm must be set on all invoices issued so that come due date the credit officer is there to collect the cheque, otherwise it can be diverted. Thirdly, when due date has passed there is need to pursue the debtor to pay. There may be need to reschedule the payment day(s). Sometimes you need to get the creditor himself but there would be a new set of conditionalities.
A debtor adjudged to be debtor by deliberate designed must be tackled either by appointing a receiver manager or petition the court for liquidation. This liquidation option is not yet common in Nigeria today.