Credit assessment and Loan Recovery in Microfinance Institutions, A Case of Pride Micro-Finance Ltd.
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Date
2017-05
Authors
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Journal ISSN
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Publisher
Kampala International University, College of Economics and Management Sciences
Abstract
The purpose of the study was to analyze the contribution of credit assessment on loan recovery in
Pride Micro Finance Limited, Entebbe Road Branch using the objectives to examine the practice
of credit assessment in Pride Micro Finance Limited, Entebbe Road Branch, to find out the
challenges faced in recovering loans in Pride Micro Finance Limited, Entebbe Road Branch and
to establish the relationship between credit assessment and loan recovery. The researcher used
sample survey research design in the study. The study used a sample size of 70 respondents. The
researcher used interviews and questionnaires for collecting data for the study. The findings
revealed that on the practice of credit assessment, the biggest percentage of respondents that was
63(90%) of the respondents strongly agreed that finding out whether a client or a company has
unpaid loan in another institution is one of the practice of credit assessment, on the relationship
between credit assessment and loan recovery, the biggest percentage of respondents that was
65(93%) of the respondents strongly agreed that Examining the clients credit worthiness before
giving out a loan makes recovering it easy and finally on the challenges faced in recovering
loans, the biggest percentage of respondents that was 56(80%) of the respondents strongly agreed
that failure to track and reconcile accounts makes collection of money from some borrowers
difficult and tough economic conditions which are unfavorable to the borrower and sometimes to
the lender makes loan recovery a big challenge where 50(71.4%) of the respondents strongly
agreed. A big number of the respondents also disagreed that weak credit policies is a big
challenge to paying back loans. The researcher recommended that pride micro finance should do
frequent checks and follow-ups on customers that had borrowed, credit depatiment be properly
resourced and facilitated to visit the customers regularly and finally in order to select potential
and risk taking applicants the micro finance institutions should have adequate applicant
screening criteria such as credit discipline or repayment history current capacity to repay loan
personnel behavior and business experience should be considered at the time of applicant
Screening.
Description
A research report submitted to the Collage of Economics and
Management in Partial Fulfillment of the Requirements
for the Award of a Bachelor's Degree of Business
Administration of Kampala International
University.
Keywords
Microfinance Institutions, Credit Assessment, Loan Recovery, Pride Micro-Finance Ltd