Distress problems in .Nigerian financial institutions res ulted into their liquidation. I Prior to the distress syndrome, many financial institutions could not respond very effectively ~ to the needs of small-holder farmers in Nigeria. However, empirical evidence shows that debt recovery is one major constraint of most financial institutions. It was in view of the identified problem that a research was carried out in Enugu State of Nigeria to investigate how effective is the use )of local sanction I ' strategies for agricultural loans by farmers under the community banking system. The result of final statistics of factor analysis showed that three factors accounted for 72.3 percent of the total variance observed in farmer' loan recovery 'rankings of nine I attributes. Factor one alone accounted for 35.4% of the observed variance compared to I 23.3 % accounted for by factor two, and 13.6% by factor three., Thus, factor one may therefore, be regarded as "the group's refusal of loan-debtors having share in annual feasts amongst others or stoppage of social benefit", factor two as "non participation in elective
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