ASSESSMENT OF CREDIT MANAGEMENT POLICY AND LOAN COLLECTION PROBLEM IN CASE OF UNITED BANK S.C

Abstract

This study assessed credit management policy and loan collection problem in case of United Bank S.C. This was carried out by analyzing the bank’s credit management policy and procedure towards loan collection; assess loan collectability performance of the bank, evaluate credit risk management method, examine the trend of NPLs of the bank with in the study period and identify the methods used to recover debt. The descriptive survey method was used for the study. For this study the researcher used all 60 credit related employees was select into a sample population by judgmental or purposive sampling from the total population of employees due to the specific needs of the topic which require people who have good knowledge and experience in relation to the study. Two main sources of data were used for the study namely, the primary and secondary sources of data. Questionnaires were used as the main instrument to collect the primary data on access to the bank credit management policy and procedure towards loan collection; examine loan collectability performance of the bank, evaluate credit risk management method, and identify the methods used to recover debt as well as secondary data important for examine the trend of NPLs of the bank with in the study period. The study findings revealed that lack of proper monitoring was the main factor for divisions of fund. Finally, this study ends up with some recommendations were bank should considered different loan recovery method, like periodic credit call; review the applicant’s previous track record; review credit risk rating and annual review of accounts; develop evaluation method of current business activity and market, identifying and examining the causes of defaults, and should look for any attachable property.