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The study intended to assess the effectiveness of commercial banks in the managing
mortgage loan for the two phases from 2009. Since early 2000s, Tanzania adopted
several policies for empowerment and poverty reduction, including economic
empowerment policy of 2004 that resulted into establishment of different kind of
credit for the aim of empowerment individuals and companies to reach their goals.
This product was supervised by the KCB Group Committee as all the activities are
supervised by KCB Kenya.
The study utilized both secondary and primary data. Although the main sources were
secondary data, personal interviews were used to supplement the secondary data.
KCB was the case used in this study. Both qualitative and quantitative tools of
analysis were employed in ascertaining research questions.
Results show that Kenya commercial banks played a big role in managing mortgage
loan risks of because the banks was formally regulated and always adhere to rules
and regulations. However, the objectives of the bank is to meet the Profit before tax 7
billion, and this is possible when the bank provide more loan to the customer, the
interest obtained from the loan is higher compared to the interest of another products.
It was revealed that individuals who got such loans have improved their living
standard, increased capital, and improved their scope of economic activities. Though,
there were some challenges in controlling mortgage loan risks such challenges
include the wrong interest rates, collaboration of staffs and customers, over valuation
of the property and fake documents had much to do with fraudsters affiliation than
technical that posed difficulties for bank officers to properly implement it while
observing the bank image.
However, During his speech to bankers on the 23 November, 2012 in Arusha His
Excellence President of the United Republic of Tanzania promised to reduce the
interest rate of all types of loan particularly mortgage so as to remove the burden to
Tanzanian. It is recommended in this study to work out through the challenges posed
on the process of disbursed mortgage loan. Recommendations include review of the
KCB policy on mortgage procedures. |
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