The impact of credit appraisal on loan recovery in micro finance institutions in Uganda; a case of finca micro finance katwe branch:
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Date
2019-06
Authors
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Publisher
Kampala International University, College of Economics and Management.
Abstract
The purpose of the study was to analyze the contribution of credit appraisal on loan recovery in
micro finance institutions, Katwe branch using the objectives to examine the practice of credit
assessment in Finca, Katwe Branch, to find out the challenges faced in recovering loans in Finca,
Katwe 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
department 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 college 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
credit appraisal, loan recovery, Micro finance Institutions, finca micro finance