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The main objective of the study was to find out the factors affecting the loan repayment
by SACCOS to Commercial Banks in Tanzania, Specifically the study investigated the
time given to SACCOS borrowers for loan, whether the SACCOS Borrowers have
sufficient knowledge to conduct business in to generate sufficient income hence repay
the loan and determined the effect of interest rate on loan given to Sacco's by
Commercial banks in Tanzania. The study used the null hypothesis that; “Loan
repayment is directly related to period of time, interest rate and technical know how to
do the business”.
Literature review was done to identify basic concepts and theories used in the study,
and, finally designed and conceptual framework having five main concepts i.e. Time,
Interest rate, Business knowledge, Loan amount and repayment.
Data was collected using open-ended questionnaire and the data was coded entered in
a computer finally the final findings were obtained. The analysis was done using a
Statistical Package for Social Scientists (SPSS), and descriptive statistics was used to
do the analysis from which conclusion were made.
It was concluded that the study revealed that the overall repayment performance of the
borrowers and the screening techniques which the institution follows to ration the loan
to its members were found to be sound, improved positively the incomes, access to
education, access to health facilities and nutritional status of the borrowers.
Based on the findings, it is recommended that the bank should make sure that the credit
period which are given to clients is sufficient to circulate the funds borrowed and repay
the loan, the loan size is appropriate for the size of the business which is sufficient to
generate income and be able to repay the loan, conduct seminars on customers
educating them on business planning which help in using the loan on the intended
purpose and to be trustful on the repayment. Also the bank should increase the penalty
for those clients who do not repay on time, charge some of the credit policies on time
to repay the loan. The client should be given at least grace period of 2 months when
he/she takes the second or third loan. |
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