DESIGN AND IMPLEMENTATION OF LOAN SCHEME MANAGEMENT

SYSTEM

ABSTRACT

This work borders on loan scheme management system. The current system of loan

scheme management system is faced with few technical issues, ranging from Time

wasting in granting of loan to customers. This calls for the need to develop a

system that corrects this error. The design loan scheme management system Enable

the Credit officer grant loan effectively. The present system Keep proper records of

Loan Portfolio. The methodology adopted for this project is the Structured System

Analysis and Design Methodology (SSADM). The new system Generate monthly

Interest on Loan and Advances, The computerized bank loan management system

enables bankers to work without stress.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Banks being a financial institution, is engaged in the acceptance of deposit of

money, granting of credit (by means of loan, 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.

Loan service for small organizations individuals was initiated after a number of

considerations on the banking system. Major Banks are mainly guided by financial
profit for their shareholders. They are after minimization of financial risks. Such

strategies don’t leave much room to people on low income or even small

organizations that strive for their survival.

This research studied the computer-based loan scheme management system-as was

done in Unical Micro-Finance Bank Ltd. Loans are readily given to people who

have an account (mostly current Account) in the Unical Micro-Finance Bank.

Apart from being a customer to the necessary for giving him loan. Such conditions

may include: provision of collateral security, having at lest one guarantor and

filling the bank loan management form. The collateral security must be a landed

property before the bank will accept it. Also, the guarantor must have an account

in that bank and must be a reportable person in the society.The role of computer in

loan scheme management can never be overemphasized. The computerized bank

loan management form enables bankers to work without stress.

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.
 • Secured loans-: 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:-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. To increase their returns on such loans, as well as to

obtain some protection in case of default most banks insist that the borrower

maintain some minimum amount of money at the bank while the loan is

outstanding. Such a deposit is called a compensating balance, meaning that

while a borrower pays interest on the full amount of a loan, a substantial

portion of that loan is kept on deposit in the bank.

1.2 STATEMENT OF THE PROBLEM

The existing loan scheme management system of unical micro finance bank has the

following draw backs:-

i. Time wasting in granting of loan to customers.

ii. Customers Information’s are kept on Ledgers which may be eaten up by

insects.

iii. Improper calculation of monthly interest on loan account.

1.3 OBJECTIVES OF THE STUDY

The objective of this study is to develop a software that will:-

 Enable the Credit officer grant loan effectively.

 Keep proper records of Loan Portfolio.

 Generate monthly Interest on Loan and Advances

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