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The overall objective of this study is to identify, measure as well examining the
underlying root causes of Default Risks in Commercial Banks, challenges faced, and
offer recommendations on what should be done to improve the management of credit
risk in the Bank. The study applied survey method which combined both qualitative and
quantitative approaches as a way to investigate both quantitative and qualitative
information on the study topic.
The results have shown that, of the major challenges faced by Bank is lack of credit
reference bureau which accounts to almost 50% of all challenges. Other challenges
include lack of enough expertise as well as fraud and fraudulent practices.
It was an assumption of the researcher that, the tendency of NMB posing higher interest
rates ranging 18% to 21% results into very expensive loans for borrowers to repay.
This was found to be the only case with business loans which cannot generate enough
cash flows to service both principal and interest timely.
At the end of the study the author tries to propose a few issues which she believes can
make a remarkable impact on management of credit risk. Some of her strong
recommendations include the need to continue lobbying to the Government to speed up
the establishment of Credit Reference Bureau. The researcher also suggests that the bank
also needs to diversify its activities geographically to reduce its amount of concentration
in Dar es Salaam.
The author believes that all of her recommendations can be taken up and implemented
with the given resources the bank posses, the study shall remain as one of the key
reference documents for policy makers, corporate firms, students and employees of
NMB. |
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