Professional Documents
Culture Documents
Ewondo Judith Dione Report
Ewondo Judith Dione Report
Sign______________________ Date________________
EWONDO JUDITH
(Intern student)
i
CERTIFICATION
This is to certify that this internship reports entitled The role of Liquidity
Management, in the case of BPTCCUL Molyko, is written by requirements and
regulations governing the awards of the higher National Diploma in Banking and
Finance of the Hibmat University Institute of Buea. And it is therefore approved of it
contribution of knowledge and literary presentation.
ii
DEDICATION
I dedicate this work to my beloved parents Mr. and Mrs. Ewondo Charlse.
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ACKNOWLEDGEMENTS
Special thanks goes the management of BPTCCUL Molyko for the opportunity they
gave me to carry out this internship program in their institution without which this
work will not have been worth what it is. Specially my field supervisor Madam Koffi
Edith for her time and concern throughout this period and also being there when
needed.
Above all my gratitude go to God Almighty for giving me the strength and wisdom to
see that this report is a success.
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TABLE OF CONTENT
Declaration...........................................................................................................................................................i
Certification........................................................................................................................................................ii
Dedication...........................................................................................................................................................iii
Acknowledgements.........................................................................................................................................iv
Table of content.................................................................................................................................................v
Abstract..............................................................................................................................................................viii
List of abbreviations.......................................................................................................................................ix
CHAPTER ONE
INTRODUCTION
CHAPTER TWO
LITERATURE REVIEW
v
2.1.1 The Concept of Liquidity Management........................................................................................7
CHAPTER THREE
CHAPTER FOUR
ANALYSIS
vi
4.2.1. Similarities between and practice................................................................................................23
CHAPTER FIVE
5.1 Conclusion.................................................................................................................................................29
5.2 Recommendation.....................................................................................................................................29
REFERENCES................................................................................................................................................31
APPENDICES.................................................................................................................................................32
vii
ABSTRACT
BPTCCUL Molyko offers the following services, customer services and under this we
have current account, deposit account, salary account and business account. All these
helps a lot of the customers to withdraw money in need and also save their surpluses.
I did work in the following offices such as customer service, cashier, operation office and
accounting office.
Our objectives was to blend theory and practice in order to improve our academic
knowledge in personal development and working experiences in the job market. We
had both positive and negative experiences , the positive was to know the various
activities in the different offices which will help our career in future and the negative
is insolence from customers.
We realized that theory is different from practice in the sense that, the theoretical part
entails a lot of principles to be followed, while the practical part requires few of
those principles and it deals with applications.
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LIST OF ABBREVIATIONS
ix
CHAPTER ONE
INTRODUCTION
In 1975, the little drops of rain which make up the mighty ocean, its capital rose to about
14 million francs CFA solely managed by telecommunications technicians. It is
worthwhile and praise worthy to mention here that today Buea P& T Credit Union has
built up the image that makes it the privileged non- deduction Credit.
Union in the promotion of savings, loans and job creation in the Cameroon Cooperative
Union League (CamCCUL) Fako Chapter of Credit unions. The Molyko Branch can now
boast of a membership amounting to almost a thousand members. This branch is located
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just beside the Express Exchange at Molyko about 200m away from the UB Junction
towards the police station at Molyko.
The BPTCCUL has three other branches namely: Buea P & T cooperative Credit Union
Munyenge branch office, Buea P & T cooperative Credit Union Idenau branch office,
Buea P & T Cooperative Credit Union Molyko Branch office.
The BPTCCUL has as her main mission to "provide superior services to members".
The vision statement of the BPTTCCUL is "to be financial services provider in this
community most admired for its people, performance and innovation
For any organization to achieve its goals, it must have its objectives that will guide her
towards the achievement of these goals. The following are some objectives of the
BPTCCUL: to provide financial services to improve on the economic and social
wellbeing of being of their members, to encourage regular savings with its members, to
encourage the general public by assisting them with loans. Just to name a few of these
objectives.
BPTCCUL Ltd is a micro finance institution which offers various services to the general
public. P&T Credit Union offers some products like the saving accounts, current
accounts , fixed deposit accounts and services like payment of personnel, overdraft,
school fee loans, just to name a few.
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1.2.4 Organisational structure and Functions of the Company.
The general assembly constitute of shareholders who are registered in a share book
of the institution, they are also known as the owners of the business. The general
assembly comes together every year on a date chosen by them to examine the
annual report submitted by the auditing committee, to examine and approve the
balance sheet and income statement of the institution.
Board of Directors
This is a body of elected person who jointly oversee the activities of a company or
organisations. The power can only be limited by the genera; assembly.
This is the institution supervisory body. It ensures that the operations of the institution are
conducted in accordance with the statutes. The audit committee is responsible for the
audit of the business and submits its annual audit report to the board of directors.
This is a body that analyses the board of directors. The board of directors is elected by
this committee together with the shareholder of the company.
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The General Management
The general management is responsible for all areas of the organisations. He sees into
the marketing and sales functions as well as the day to day operation of the business
frequently. The general management is responsible for effective planning, delegation,
coordination, staffing, organizing and decision making to attain desirable profits
making results for an organisations.
He helps the general manager to execute plans, develop; implement oversees company
initiatives and projects. He oversees the company’s operations, has budgeting
responsibilities and is also involved in evaluating company’s personnel. He also assumes
the position of the general manager in his absence.
Administrative Secretary
This department is responsible for all transactions taking place in the general manager
and deputy general manager office. The secretory gives appointments to clients on behalf
of the general manager and the deputy general manager and informs the m when any
person wishes to see them.
The department takes care of all legal activities of the institution. They are also in
charges of recovering all loans that are out of the institution in the hands of clients
who are delaying to repay it. They take into consideration all step of loan recovery.
Internal Audits
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helps the organisations to identify and control business risk. they ensure that the
organisations resources are use in an ethical effective and efficient manner.
Business Development
Credits
This department is made up of credit risk assessment and credit control. It manages the
risk associated with credit granting and also control the amount of credit that is to be
granted. They can also reject any loan that does not meet the lending policy.
Operations
This department is made up of back office operations, credit operation. This department
is responsible for all operations that concern the institution. It is involved in recording or
keeping all accounts of the institution.
Liquidity: it is the ability of the organisations to realize value in money which is the
most liquid among all assets.
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Liquidity management: it is the ability of the organisations to have assets in liquid
form. That is cash to enable the organisations carry out its day to day activities.
Portfolio: it means total package of loan that exits in a credit union. That is total number
of loan which has been granted so far by the credit Union.
Portfolio quality: portfolio quality shows the number of good loans inside the portfolio
that the credit Union has granted.
Purchase Liquidity: This is the ability based approach of providing liquidity by banks.
The banks are actually expected to raise liquidity.
Default: this is the situation where loan balance in unable to be recovered. If the
member is unable to repay the loan.
Delinquency: this is a situation where the loan repayment is at least one day late from the
day it was supposed to be paid.
Store Liquidity: these are assets in which funds are invested to be converted into
cash when liquidity is needed.
Written Loan: these are loans which have been wiped off from the portfolio as a
result of members being unable to repay their loans. This happens when all the
strategies put in place to collect the loan had failed.
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CHAPTER TWO
LITERATURE REVIEW
According to Kang Jean Baptist Nsioge (2015) Liquidity is the ability to meet anticipated
and contingent cash needs. Liquidity for a bank means the ability to meet its financial
obligations as the fall due. Bank cash needs include withdrawal of deposits, liability,
maturity and loan disbursal. Banks should be able to meet customers need for fund at
all times whether withdrawal from the saving account or receiving funds from
maturity assets examples certificate of deposit an commercial papers. The liquidity of
the banking system has to do with the total volume of funds available for use in the
financial system.. it is a link to most financial institutions in the system and is
determined by the monetary authorities of the country the monetary policy
instruments like open market operation, minimum lending rate, special deposits are
used to influence the level of liquidity in the banking system.
Liquidity management is the ability of the banker to source the funds needed to meet
cash needs. Sources have to do with how banks generate fund needed. How micro
finances fund their operations lay an important role in determining profitability and risk.
To maintain Liquidity, banks may either use assets management banking stored
liquidity sourcing or liability management banking purchased Liquidity sourcing.
This is when financial institutions and banks holds assets that can be readily converted
to cash when needed. Small banks derived funds from customer’s deposits. Their assets
are mostly loans to small firms, households and they can find credit borrowers. The
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excess funds are used to purchase assets that van easily be converted into cash when
needed. Assets in which funds have been invested to be converted into cash when needed
is known as stored liquidity. Stored Liquidity is made up of.
Cash: Cash is made up of coins and notes on hand and the balance held by other banks.
It also includes legal reasons held with the central bank.
Money at Call: these are loans by banks to other commercial banks, discounting houses
or money market repayable on demand or at short notice with their maturity situation
within hours they constitute a good source of bank liquidity.
Long term Liquidity Closer to maturity: These are long term securities bought by
banks when they are closer to maturity. At this level, they are marketable or easily
converted into cash. Thus banks buy the long term securities that are closer to maturity
and sell them.
Short Term loans: these are securities bought by banks with short term maturity
period for instance treasury bills. Their maturity provide cash and in time of need
they can be discounted ( sold at less than it face value) in the money market for cash.
Respose: Respose agreement are securities bought under the agreement to resell. Banks
may buy government securities from other companies with the understanding that
in case of liquidity need, the issuer will repurchase the security to provide cash.
This is when banks borrow funds they need from other major lenders in the form of
short term liabilities. Large banks usually lack sufficient deposits for their main
business dealings with large companies, government and other wealthy individuals.
Most of them borrow the funds they need from their major lenders at a very high
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or low interest rate depending on the credit making of the bank. It is called purchased
Liquidity. Sources of purchase Liquidity include the following.
Borrowing from the central bank. These are loans from the central bank on collateral
at fixed interest rate when commercial banks are in need of funds. Commercial banks
are however not expected to use this methods regularly because it is a privilege and not a
right.
Call money held with other banks: this is when commercial banks money from
other commercial banks at short notice to take care of their liquidity need. The interest
rate charged here depends on the credit rating of the bank in question.
It indicates that the investors has deposited a sum of money for a specific interest rate.
Banks strive to maintain adequate liquidity at all times. Too much liquidity needlessly
limits banks earning and too little exposes the banks to the possibilities of costly
emergency measure to secure fund needs. Liquidity as a safety measure. Some
approaches can be used by banks to estimate their liquidity needs at a specific period of
time. They include the following
The structure fund approach: this is done by keeping a careful watch on the current
business situation. Here, banks funds are categorized into accounts like current accounts,
saving account and time deposit account. The banks needs to be more liquid if most of
it funds are deposited in the current accounts than in the time deposit accounts.
9
Deposit withdrawal and loan demand approach. Banks using the method keep a
careful watch on deposit withdrawal and loan demand when either of these two are going
up banks need to hold Liquidity increase proportionately.
The purpose of liquidity: the purpose of sourcing the finance is usually tied to the
nature of demand by the public or obligation to be attended to. The bank will chose one
set of source to attend to either withdrawals of deposits or granting of loans.
The Cost of Service: Naturally banks will choose the source of liquidity that charges the
least interest.
Access to liability: At the end of the day bank will choose from that are available at the
point in time that they need it most.
Current market rate of interest: this is the market rate at which banks lend to members
of the public. It is otherwise known as bank rate. Bank will therefore choose sources that
charge lesser than the current interest rate in other to make profit.
There are many factors that will affects the level of liquidity of a bank and other
financial institution. They can be seen below.
The level of withdrawal: When withdrawal from the bank increases, there will be a
decrease in liquidity and when withdrawal decrease there will be an increase in Liquidity.
The level of saving: When saving increase, there will be an increase in liquidity and
when there is a decrease in savings, liquidity will also decrease.
The level of lending: this is the most profitable activity of the bank. An increase in
lending will give rise to a decrease in liquidity but an increase in profitability.
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2.2 Theoretical Literature
This theory states that the reputation and earning power of the borrower is the ultimate
guarantee or ultimate test to pay obligations. This theory acknowledges the fact that the
banks should give self-amortizing loans so as to enhance systematic repayment schedule
on the types of loans with respect to their maturities and as such liquidity schedule can be
made out of such payments based on the capability of the borrower. This theory moves
away from the shift ability of assets to emphasize on the reputations and earning power of
the borrower. This theory has some limitations. The theory seriously ignores the fact that
economic recession exist when people need more liquidity and there is no ability to pay
because of loans turn over in their respective business due to recession .
Because of the weaknesses of the asset based theory which concentrated on the asset
side of the balance sheet, the liability management theory focuses on the liability side
of a financial statement. This theory argues that since large banks can buy all they funds
they needs, there is no needs to store liquidity on the asset side of the balance sheet. This
theory focuses assumes that increasing the interest rate of loans will pluck increase
supply and provide for Liquidity needs. The theory cancels out the unavailability of funds
at any price, here banks borrow funds they needs from sources such as other banks, the
financial markets. A limitation of this theory is that the theory focuses only on the
liability sides of the balance sheet. The theory might also be affected by an increase in
the rate of interest on loans. Banks may not be prepared at getting loans at a very high
rate of interest. At a high rate of interest the demand for loan will fall and so will income
from liability sources.
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2.2.3. The Shiftability Theory
This theory was developed in (1920). According to this theory, bank funds should not
only be based on financial working capital but banks should also recognize long term
more permanent types of financing. It acknowledges that banks should deviate a bit from
short term self-liquidity loans and the growing importance of investment banking with
holding of marketable sticks and bonds. This theory emphasis the shiftability,
transferability of banks and marketability of bank assets. The theory talks about the mix
of short term self-financing and long term loans. This implies the ability if the bank to
swap the two types of loans and generates cash. This theory has gained more tribute
because liquidity is not only for short term but also for long term since business is not
just for short run but the mixture of the two. This theory has some limitations in an
economy that is experiencing slump. Such economy have high rate of unemployment,
high cost of living as such it becomes very difficult for banks to transfer their
securities in order to get liquidity.
This theory was developed in the English banking system (1913). This theory states that
banks should invest their funds in short term self-liquidating loans for working capital
purposes. It means that bank funds should be invested in loans that can easily be
repaid as used in the day to day running of the business and to finance only short
term investments. It also has its weakness as it focuses only on the assets side of the
balance sheet.
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CHAPTER THREE
The intern wrote her report using primary and secondary data. With primary data, the
information was gotten through observation, interaction with staffs and the manager
during a face to face conversation. While secondary data was gotten from text books
internet , lecture notes and company’s records.
BPTCCUL has several services and product which they offer to their customers at
different prices with different option too.
These shares constitute the long term capital of credit union. The share entitles
membership right and obligation. All members are entitles to fifty (50) shares with
nominal values of 7000FCFA per share. These shares generate interest to members
and can only be withdrawn when a members wants to withdraw his or her
membership.
Saving Account
With saving account the member starts by filling members form after which the
member could start saving money in that account. In case of any withdrawal from the
account. The union needs to be notified from one to two months before effective
withdrawal or pay a 2% charges for instant withdrawals. This is because savings are
insured monthly. This account interest is been calculated every year at a considerable
rate.
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Deposit Account
Deposits are intended to facilitate members day to day transactions. This account helps
members keep their money and withdraw it when need arises. Deposits attract some
small charges known as deposits fee at the time of depositing but no charges are
paid during withdrawals. This account attracts no interest at the end of the year.
Payment of salaries
In P&T civil servants and private institution employees receive their salaries. It becomes
easier as they to obtain a direct salary code from the ministry of finance.
Special Operations
This is the sending and receiving of money from one branch to another. Money sent in
one P&T branch can be received in another upon presentation of a valid national ID card.
Money transfer can also be done between P&T and another credit union affiliated to
CAMCCUL.
Loan
It is another products or P&T which is given to members of the credit Union with the
ability of repayment or to those who have a reasonable collateral security but loans
above 100 000 000FCFA are forwarded to CAMCCUL. These types of loans are known
as Golden loan for approval or disapproval. There are many types of loans some include;
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i.) Overdraft
ii.) School fee loan
iii.) Agricultural loan
iv.) Consumption loan
v.) Business loan
vi.) Special loan
The above types of loans have variation in the interest rate depending on the types
of loan. These loans are classified as short term an long term loans, for those with
the duration of 0 to 12 months are short term loans. For medium term is from 12 to
24 months and long term loans are those from 48months and above.
These are loans guaranteed by member’s shares and savings. These loans are granted at
the interest rate of 1% or 10FCFA PER 1000FCFA on loan balance.
These loans are guaranteed by members shares savings, and other securities such as
real estate ( Land or building), banks standing order and sureties. Such loans require
members comply with the requirement stated in P&T loan policy. The interest rate stated
in such loans is 1.8 and or 18FCFA for every 1000FCFA per month on the loan
balance.
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Transfer Facilities
BPTCCUL offers transfer facilities like western Union. P&T sends and receive money
from in and out of the country through western union. It also has its own services
called speedy cash In which it transfers money within branches of P&T.
This is an account that is made up of a group who either own and run a business
firm together or belongs to a union, a group can be a Njangi house, school, village
meeting work this account the customers get a personalized cheque used in cheque
during and access to financing that is loans and overdrafts.
Private sector: this is an account that is made up of workers who work under the private
sector. They are also given personalized cheque. In additions it is very beneficial in that it
has quick access and quick service.
The intern’s scope of study was from 15th July to 15th August 2022 at post and
telecommunication Credit Union Ltd Molyko Buea.
I started working fully on the 15th of July 2022 at P&T Credit Union Buea, Molyko. I got
there at 7:30am after 10 minutes the accountant came and greeted the interns and
after 20munites the manager came and the door was opened we went in. the manager
called all the interns and wished us a good welcome and also introduced herself.
Then after she told us a brief history of P&T it function and branches. She also gave
us two important points that must be respected that us dressing code and confidentiality.
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We learnt that P&T has three offices two in front and one inside the two offices in
front are the customers services office and the cashiers office while the one inside
is the manager’s office.
We also worked with the customer service department. In this department we were
taught how to attend to customers by helping them to fill their withdrawal slips,
deposition slips and loan forms. We were also taught how to personalize a cheque in
this department by arranging characters on a stand containing the name of the member,
the account number and phone number. We also learned how to use a perforator,
arrange paper in a chromo and how to fill a loan form. We also learned stock taking in
this department, that is the various stocks of the banks, their cost price and their
selling price. (Cheque booklet, pass books, loan forms, union cloth and daily saving
booklets). We were also oriented on how to check salary list of various institutions which
pay their workers through the bank.
Working with Madam Enanga Ann, I had the opportunity to know how to create a
bank account of members currently joining the union. Also, I had the privilege to
count money after the end of each day and to get to see the saver for my first time.
It was really good working with her because she gave room for questions and she
also made sure she answered our questions.
This departed is concerned with the granting of loans. The interns were taught that
before a loan is granted, the 5Cs must be taken into consideration that is Character,
Collateral, condition, capacity and capital. This is done in order to avoid delinquency of
poor assessment of loans, bad faith of customers and unforeseen circumstances. Before a
loan is granted, to a customer, the intern under the supervision checks the name of the
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member, his account number, the amount needed as loan, the type of loan the
member wants to take putting 5Cs policies into practice, giving the member some
words of advice for he/ she to use the money wisely and make payment promptly.
The member then buys a loan form and fill all the required information, the loan officer
assess and makes recommendation of the accepts or rejects attained to the loan
form.
Week four (with the loan recovery department and the manager)
The loan recovery departments are responsible for the following up of delinquent and
default loans. That’s when the loan is granted and the due date passes. It is delinquent.
When this happens the loans officer will send a letter of reminder to the member and if he
do not respond, the second can be sent and even the third. The loan manager can also
visit the members site and discuss the issues of the loan payment with he/she. If he
cannot respond, then it becomes a legal issue. The follow up will be done in court during
this period interest is wiping on the loan. The intern was taught on how to follow up a
delinquent loan by the manager of P&T. We worked in this department for some days.
During this week and the other days were spent in the manager’s office.
The manager of P&T Credit Union Molyko Buea is Madam Koffi Edith. In the
manager’s office we learned how to compare physical stock to the stock in the system
( computer) , by so doing, we were told to open the account and check if amount in the
system corresponding with that in the system. If it is not up to the stock in the system,
you are to debit it. To do this you take the total amount of stock divided by the price
of stock which will then give you the total amount of stock remaining. This was done
practical by using the managers computer.
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3.5 Activities of the Focus Area (Loan Department)
The main objective of banks and other micro finance to be liquid, profitable and safe.
Every business man organisations and nation at large would need to be liquid. If there is
no liquidity none of the person above can carry out investment efficiently. Liquidity is
the point if focus for every organisations or microfinance institutions. There is a trade off
between Liquidity and profitability. This means that financial institutions will like to
keep more cash or satisfy withdrawals and run their day to day operations at the
same time they want to give out loans which is the main source of profitability. It
should be recalled that the highest income of financial institutions come from lending.
Liquidity is defined as the ease with which an asset can be converted to cash. It is the
ability of the organisations to have assets in liquid form in order to enable the
organisations carryout its day to day operations. The fact that a bank is profitable does
not mean the banks is liquid because the bank financial state such as the income is
prepared based on the accrual concept. The accrual concept states that income can
expenses are recorded in the account when they occurred and not when cash or
cash equivalents are received for the income or paid for the expenses. Therefore
income statement report profit when the business has no cash. A cash equivalent is any
item that can be converted to cash easily at less or no risk example government
bond.
The financial manager must understand the trade off that exist between liquidity
and profitability and should be able to minimize the gap between profitability and
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liquidity. Conscious managers must know that the liquidity of financial institution
vary with time and as such , profitability also varies with time.
The amount of loan that is demanded in September will be different from the amount
demanded during an ordinary month where there is no lack meaning little or no
expenditure. The liquid need of a bank in Yaoundé will be different from bank in a
local area.
Summarily the liquidity of a bank depends on so many factors such as period of the
years, the state of the economy, liquidity objectives.
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CHAPTER FOUR
ANALYSIS
Strength of P&T Union is what makes the company strong to meet up with its objectives.
Reputation
It is one of the proud Micro-finance in the area and has kept up a good face.
Team Spirit
The workers here are very united and team work is what keeps the company
going.
Energy Guarantee
They have an available generator which is there in case of any failure by ENEO to
continue their daily activities.
Security
The office is highly secured with a well –trained security guard from a group of security.
The secure the ban both day and night.
The customers services is considered to be the best department in the Molyko branch
because she is very welcoming and do not get to emotional at work with these qualities,
customers feel comfortable and as such encourage clients to visit the institution.
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Respect of authority
The hierarchy nature of the institution makes work very orderly and well organised
that every staff does what he/she is to do at the right.
They have one of the best software since it allows every staff in other own
department to access hi/her own account without someone else’s knowledge since
their passwords are not allowed to be known by another staff or any person.
The credit department goes to other institutions to find out about the lending rates
and try to reduce them. Thus has attracted small scale business men around the area
to have an account BPTCCUL Molyko so that they can safe guard their finance and
seeing the credit policy as a means of increasing their small scale business by making
a loan form the institution.
Shortage of staff, the institution lack staffs especially in the department of teller and loan
office. This has made the institution to be slow in serving their customer on time. Since
one workers is responsible for two department , for example , At P&T the accountant
plays the role of an accountant and teller at the same time while the manager
plays the role of a manager and loan officer which makes work slow. The institution
also lack extra staffs in case a staff is on leave, there should be someone to take
care of the seat when the staff is on leave till his/her leave is over.
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Absence of specialization
The institution deals with all the financial services and products that other financial
institution are providing like ENEO & Akawoh. This has made them to be considered
as jack of all trade but masters of none. Hence, makes them to be less efficient.
Lack of Connection
This is very usual with the institution , they lack a good connection system and this
delays the transaction of clients who are time conscious and scares clients since some
are impatient to be waiting for connection frequently and they may decide to try
another financial institution there by reducing the number of customers in the
institution.
The management of the institution does not allocate separated task to different workers
but rather one employee is entitled to so many task in which in case of his/her
absence members transaction with the institution will be delayed till she returns.
Since human beings are very unpredictable, it is not totally possible to known
beforehand the mind of others. This constitutes a big hindrance to the institution
to avoid loan recovery after granting the loans to the clients.
The intern discovered that, marketing the institution products has become difficult. This
is because many customers have lost faith in Micro-finance institutions for running away
with people money in the past.
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The intern equally discovered that the banker is supposed to follow up the members
to see that he pays the loan and develop strategies to recover the funds in case the
term of payment are not respected. The strategies are being used By BPTCCUL Molyko
also develop strategies to recover the unpaid funds.
In Credit policy of the institution, there is the respect for the 5Cs principles of good
lending ( Character, Capacity, collateral, condition and capital) which states that for
every successful loan to be granted, it is important that the credit standard be based
on individual credit application and taken into consideration.
According to the liquidity asset theory, banks must hold an enormous amount of liquid
assets and reserve against possible demand for payment by members if credit union
does this in other to meet up the demands of its members.
Also, according to the commercial bill theory, funds should principally be invested on
loans that can be easily paid and used for day to day operation of the business, and not
to finance long term investments for instance. The purchase of land plant and equipped.
BPTCCUL Ltd Molyko invested on short term self- liquidating loans for working capital
purposes.
According to the anticipated income theory regardless of the nature and character
of a borrower business, the banks plans the liquidation of the term loan from the
anticipated income of repaid out of the future income of the borrower in
installments, instead of lump sum at the maturity of the loan.
This theory is superior to the real bills doctrine and the shiftability theory because
it fulfills the three objectives of liquidity safety and profitability. Liquidity is assured
to the bank when the borrower saves and repays the loans regularly installments.
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It satisfies the safety principles because the bank grants a loan not only on the basis
of a good security but also the ability of the borrower to repay the loans. The banks
can utilize its excess reserves in granting term- loan and is highly beneficial for
medium – term. Nevertheless, the theory of anticipated income is not free from a few
defects. Analyzing credit worthiness, it is not a theory but simply a method to analyze
a borrowers credit worthiness.
It gives the bank criteria for evaluating the potential of a borrower to successful repay a
loan on time. Fails to meet emergency cash need repayment of loans in installments
to the banks no doubt provides a regular stream of liquidity but they fail to meet
emergency cash needs of the lender banks. More so, the liability management
theory argues that banks can buy all the funds they needs to solve their liquidity
needs and assumes stability of the normal rate of interest and confidence of the
market credit worthiness, where as in real world situation, the rate of interest is
fluctuating.
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operates the following accounts, individual saving account, saving deposit account for
groups , daily saving account, salary account just to name a fess.
The problem here is often seen between the deposit and saving account, many
members upon opening an account prefer the saving account because it yields them
interest not taking into consideration that the account holds the view that
withdrawals of huge amounts requires a written notification to the credit union
meanwhile, with the deposit account members deposit their money in this account
and expect it to yield interest not knowing that with this account the owner is oblige
to pay interest to the credit union for keeping their money and the pay for
withdrawals at any time without notification to the credit union.
Influence and loan discrimination by the board. Some members complain that most of
the delinquent loans in the cooperative are caused by the board. Board influence the
loans officer and the manager to grant loans to some members who do not have a
relative to the member of the board.
Withdrawal of Members
Some members withdrawal because of the high rate of loan delinquency in the
cooperative and other say they are living because of high interest rate charged on
loans. Lack of information about BPTCCUL Molyko by the general public while at
the internship the intern were sent out to the general public to market the
cooperative, some members of the public said they have heard but do not know it
location and were doubting if there is a branch of BPTCCUL at Molyko, some said
they don’t know if here is any cooperative existing like P&T Credit Union Molyko.
Inadequate staffs: the cooperative should increase its staff at P&T Molyko the staff
that are available are not sufficient for the cooperative. The top management should
either increase their staffs or accepts candidates for voluntary services. This will
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help the branch at Molyko to improve its productivity. The organisations should also
make use of credit card machine, many financial institutions all have / use credit card
machine which saves time during withdrawal and avoid a queue in banks.
The intern had no knowledge of the alpha software used at P&T molyko. This was very
challenging, as she had to use it. this was a computerized accounting software while
carrying out this research the intern was faced with challenges.
The non-allocation of supervisors.: The ]bank did not allocate supervisor to the
interns per each of the department and weeks which made intern to actually know
what to leans and how to come out with their internship report.
No practical activities in some offices during the internship , intern did not have
practical activities in some offices that were visited like the loan departments.
During my month spent at P&T Molyko Buea, I learnt a lot of stuffs ad also had the
opportunity to put into practice some of the lessons learnt in school . They can be seen
as follows;
I had the opportunity to interact with customers, this was actually an interesting
but difficult experience. It was an opportunity because I had the chance to meet and
discuss with some lecturers both from the University of Buea, Biaka University and
St, Monica University who taught me a lot on how to receive and serve customers. It
was difficult in the sense that not all customers where friendly and so me where
not patients enough to wait for their tend which caused disorder at times.
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I also learned how to create an account with the help of the accountant madam Enanga
Ann, which I was so grateful because I created an account using the alpha software
last but not least.
I learnt how to compare stocks that is physical stocks and stocks in the system with
the help of the manager madam Koffi Edith through the use of the Alpha software
which helped to increase my practical skills.
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CHAPTER FIVE
5.1 Conclusion
In conclusion, liquidity plays a major role in the activities of P&T credit Union
Molyko such as meeting the demands of depositors, funding risk, and payment of
short term debts obligation of the institutions liquidity can be considered as the
backbone of every financial institution with an adequate amount of liquidity, the
credit union will be obliged to meet up with its obligations.
5.2 Recommendation
During the internship study at BPTCCUL Molyko, Intern witnessed and observed
some weaknesses and complains which has forced her to make the following
recommendation.
With respect to the high rate of delinquency in the credit Union, the bard should
stop influencing the loan officer from properly assessing members who wish to
barrow because they are one way or the other related to a member of the board.
Also, educational meetings should be held to educate members on how the accounts
are operates in the credit union, most especially the current and saving accounts.
Moreover, business people whose loans are delinquent should be encouraged to use the
daily savings as a means to repaying the loans.
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Delinquent loans within shares should be deducted from saving after keeping members
informed.
There is a great need for a photocopy machine. During my internship at P&T activities
were slowed down due to the absence of a photocopy machine like in the case of
admitting a new member which requires the photocopy of the members ID cards
makes the activity slow, but as if there is a photocopy machine it will save time and
reduced both members and staff stress.
As fast growing establishment T suggest that P&T should increase it number of staffs in
order to improve on their activities serving members rapidly.
Again the union should create a reception to ease the problem of constant congestion
and permit free movement in and out of the union which can be achieved through the
construction of a large union.
Lastly, I also suggest that the union should purchase an automated teller machine for it
customers in order to reduce congestion and save time of its clients, the automated
teller machine will also give the P&T clients the opportunity to have access to their
money even during the night.
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REFERENCES
31
APPENDICES
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Appendix II: Cash Withdrawal Slip
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Appendix III: Organigrame of the Company
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