ABSTRACT
The challenge identified by this research was the manner of collaterisation of credits by financial institutions. It was discovered that due to the volume of funds available at the disposal of financial institutions as a result of the consolidation exercise and stiff competition towards making substantial margin of profits, some financial institutions often comprise or even ignore standard in giving out credit to their customers because of a combination of factors viz: ? Insider credits ? Desire to make huge profits ? Political reasons ? Ethnic considerations Thus, as a result of the above factors, financial institutions often get saddled with lots of bad debts which usually militate against the growth of an organization with the likelihood of distress and corporate failure since the credits were not given based on business considerations. To arrest this situation, regulatory authorities like the Central Bank of Nigeria and the Nigeria Deposit Insurance Corporation should commence the enforcement of the provisions of the Banks and Other Financial Institutions Act which provides for various categories of offense and penalties relating to Bank officers who give credit facilities that were supposed to be backed by security, without such securities.