Effects of Payback Policy on the Servicing of Small Loans A case study of Pride Microfinance Limited, Kampala.
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Date
2019-03
Authors
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Journal ISSN
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Publisher
Kampala International University, College of Economics and Management Sciences.
Abstract
This study was on the effect of payback policy on servicing of small loans with the case
study of Pride Microfinance Limited (PML), Kampala. The objectives of the study were
to; examine the effect of Eligibility Policy on the Servicing of Small Loans; explore the
effect of Interest Rate Policy on the Servicing of Small Loans; and ascertain the effect of
Risk Management Policy on the Servicing of Small Loans in PML, Kampala.
The review of the literature revealed three payback policies in microfinance institutions
(MFIs) and their effect on the servicing of small loans. The literature was reviewed in
accordance to the stated objecti~’es.
In order to achieve the objectives, both qualitative and quantitative methods were used in
this study. The study used probability sampling and most specifically stratified sampling
method. Data was got from both primary aid secondary sources. Primary data was
collected using questionnaires that were administered to a sample size of 54 staff and 19
customers of PML. interviews were also carried out by the researcher on top managers
and some customers of PML. Secondary data was gathered from; publications, internet,
and unpublished documents. Data was analysed and presented both in tables and
graphical forms.
The findings of the study revealed that, PML had payback policies of eligibility, interest
rates and risk management in place. The eligibility policy and risk management had a
more positive significant effect on the servicing of small loans in PML than Interest rates
policy. The positive effects were harnessed mostly due to the level of implementation of
these policies although challenges were seen in the areas such as: poor attendance of
meetings by clients; lack of consultation of stakeholders by PML while setting interest
rates charges; limited diversification of investment by PML; and ineffectiveness of the
risk management policy in ensuring that they are neither avoiding risk nor ignoring risks.
It was recommended in the study that; clients regularly attend meetings; PML consults all
stakeholders while fixing interest rate charges; PML diversifies her investments and PML
reviews regularly her payback policies.
Description
A research report submitted to the College of Economics and
Management Studies in Partial Fulfillment for the Award
of Bachelors Degree of Supplies and Procurement
of Kampala International University.
Keywords
Small Loans, Payback Policy, Effects, Pride Microfinance Limited, Kampala