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The general objective of the study was to examine factors which affect commercial banks during loan recovery process. To examine debt recovery and loan management in commercial banking. The focus is on the management of the risks involved during loan recovery and reduce these risks to be the bearest minimum since it is inevitable.
The objective of the study centered on the impact of debt in commercial banking operations vis a vis loan management, Highlighting the various strategies employed in the recovery of bad debts, and to know how to guide against future re occurrences of nonperforming loans.
The stated analysis of the study has shown that, loan recovery is not determined by persuasion, court action, debt collectors and so on, The area covered by the study include, Overview of the credit facilities, Risk management, Acceptable securities in bank lending. Factors mitigating against recovery and Structure of loan management.
The study also takes a look at the review of the relevant literatures, which are the theoretical as well as empirical reviews on analysis and underline principles of bank credits. Obashore (1985), and Jonathan Golin and Philippe Delhaise (2013), explained that ‘’ Loan and Advances are important to banks because they account for a large proportion of their income’’
The study was conducted in 15 different branches i.e Mwanza branch, Musoma branch, Mwaloni branch, SAUT Branch, Nyerere branch, Bugando branch, Nyanza branc,h, Shinyanga branch, Tabora branch, Kahama branch, Karagwe branch, Kigoma branch Bariadi branch,Tarime branch and Geita branch and customers were given questionnaires. Simple random sampling technique was used and 12 questionnaires were given to customers and 14 questionnaires were given to Loan officers and administered.
The data were collected through primary and secondary sources, analyzed and assisted to come up with findings and recommendations. In the study it was found that persuasion method is the most acceptable strategy in the recovery of loan. More so the effect of nonperforming loans on the operations of the banks have led to the reduction in their project financing and other financial assistance being rendered to the general public. Also from the analysis and findings it was concluded that, no bank can survive in any economy without lending, whether the bank like it or not they should be ready to face the attendants problems of booking credit facilities to their various customers.
Finally based on the major findings on this research, and the need to reduce the attendants’ problem on loan, the recommendations made include, Proper implementation of the failed bank decree without favoritism on part of tribunal in discharging their duties. Bank of Tanzania should improve on its supervision, and examinations of banks. Banks should have good quality risk analysis, effective credit control and close supervision on disbursement and the up to date knowledge of the borrowers’ activities as well as adequate care should be taken to ensure that collateral; is marketable and should be free from any encumbrances. |
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