Credit policies and loan recovery in microfinance institutions: a case study of FINCA Uganda, branch

Thumbnail Image
Journal Title
Journal ISSN
Volume Title
Kampala International University,College of Economics and Management
The study was about Credit Policies and Loan Recovery in Microfinance Institutions: A Case Study ofFINCA Uganda, Kamuli Branch. The study was based on three objectives; establish the existing credit policies in FINCA Uganda, Kamuli Branch; to examine how loans are recovered in FINCA Uganda, Kamuli Branch and to establish the relationship between credit policy and loans recovery ofFINCA Uganda, Kamuli Branch. The study adopted a descriptive research design and employed both qualitative and quantitative data and used both stratified and random sampling to select a sample size of 50 respondents. Self administered questionnaires were used to collect data which was analyzed using descriptive statistics. The study revealed that a larger proportion of the respondents were aged between 25-30 years. Most of them were married females. Majority of the respondents had attained degrees and had worked with FINCA for 3 -4 years hence were knowledgeable about the subject matter. The study revealed that most of the FINCA clients have a positive perception about the existence of credit policies applied in order to manage exposures or risks of loan default. Findings also revealed that regulatory framework influences the repayment of loans. The finding of the study indicated a strong positive relationship between credit policy and loan recovery. The researcher concluded that credit policy has a significant impact on loan recovery of FINCA Uganda; therefore, it should be very selective in choosing credit policies which will yield desired results and fit in its resources and at the same time choose credible and trained officers to carry out monitoring and supervision of loaned amount. The researcher put fom1h some recommendations and among them included; making clients appreciate the credit policies and recovery procedures. FINCA has to educate the clients and also listen to their grievances. Education background was found out to have an impact on the client's understanding of policies and recovery procedures and that the weekly deposits affect the payback period, the institution should either extend the payback period from one year to at least two years or extend weekly deposit to monthly deposits so as to increase the percentage of payback from 50%-75% to 75%-100%. FINCA must look into scrutinizing the customers who borrow loans thoroughly before the loan is issued.
A research report submitted to the College of Economics and Management in partial fulfillment for the requirements for the Award of a Bachelor's Degree in Business Administration of Kampala International University Uganda.
Credit, Policies, Microfinance