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The money sector plays a terribly vital role in the development of any country or nation. The banking sectors, as a serious player in the financial system, could be a major concern to any or all and sundry during a country most significantly the govt. through its agencies like the central bank and the ministry of finance. Recently, there has been a big upheaval within the Nigeria money sub-sector i.e. the banking sector as the Central Bank of Nigeria and also the Governor, Sanusi Lamido Sanusi, audited the accounts of some banks and came up with an inventory of banks that are found faulty.

THE CONCEPT OF BANKING AND BAD DEBT

Banking could mean completely different things to different people. Scholars, bank professionals and even laymen had outlined the concept and tons are still happening to capture what banking denotes in the current time taking into thought the changing world environment. A number of definitions shall be thought of here:

Banking, per InvestorWord (2009) has been outlined as participating within the business of keeping cash for savings and checking accounts or for exchange or for issuing loans and credit, etc. But, from finance perspective, it is defined as 'the management of cash and credit and banking and investments. From right of offset perspective, InvestorWord sees banking as the legal right of a bank of seize deposited fund to hide a loan that is in default.

Wikipedia also gives a range of definitions on the word banking. First, it defines banking because the transacting business with a bank deposit or withdrawing funds or requesting a loan, etc. A second definition sees it from monetary perspective, deforming banking as the commercial activity of providing funds and capital. A lot of relatively trendy term is that which defines banking from home banking perspective as 'that in which transactions are conducted by suggests that of electronic communication (vial telephone or pc). Different definitions as provided by Wikipedia are:

i. Banking is the business of a bank or of a banker (role perspective)
ii. Banking is that the art of transacting business with bank, depositing or withdrawing funds or requesting a loan etc.
iii. Lastly, banking as engaging in the business of banking, maintaining savings and checking accounts and issuing loans and credit, etc.

In all, banking may be a nebulous concept however one might curl out some cogent terminologies so vital the concept of banking to include the subsequent: Exchange, account, business, savings, checking, loans, credit, finance, deposit, withdrawal, fund or capital, transaction, and issuing.

THE CONCEPT OF BAD DEBT

There's no organization, whether banks or others kind of multinational that prays for unhealthy debt. Ironically, unhealthy debt is table in some bound organization, additional importantly within the banking sector where loans are being given out in millions and billions on even daily/weekly basis.

Backlog of irrecoverable loans might sum-up to dangerous debt which used to cause nice threat to the survival of most banks. The recent audit of some bank's records which reveals anomalies within the operations of such banks and that led to the removal of seven bank chiefs (CEO) up-to-date has been the speak of the city and a additional controversial issued both regionally, nationally and at the planet's scene.

Here, we shall be looking at some of the definitions of unhealthy debt because it were and do a bit of exigency on the concept.

The investor word takes a comprehensive have a look at the concept from 2 perspectives Vis-a-Vis Non- GAAP and GAAP. Also, dictionary of finance and investment terms defines it as open account balance or loan receivable that has proven noncollectable and is written off.

The dictionary of Banking terms describes unhealthy debt as loans classified as a probable loss and has no economic values.

Lastly on definitions, the dictionaries of Business terms see bad debt as debt that's not collectible and is so worthless to the creditor. Thus noncollectable because the debtor is insolvent; while the dictionary of marketing terms place dangerous debt as 'client failing to acquire the merchandise or service received; also referred to as dangerous pay'.

The highlights from these definitions are:

i). Unhealthy debts are receivables
ii). they are invariably noncollectable
iii). the debtors are usually insolvent
iv). Dangerous debts are sometimes written off
v). They're treated as expenses within the income statement
vi). They are loss to the going concern
vii). Such amount is worthless to the creditor

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Tags: bad debit cards, Debt, debt consolidation, debt management