A Dissertation submitted in Partial/Fulfillment of the Requirement for the Award of the Degree of Masters in Accountancy and Finance (MSc A&F) of Mzumbe UniversityThe problem of non-performing loans is seen as a burden on any country’s economy or financial institution and putting downward pressure on its growth. This is because the role of banks as financial intermediaries does not function properly due to the problem of non-performing loans (NPLs). The general objective of the study was to examine the factors affecting non-performing loans in KCB Bank (Tanzania) Limited; Morogoro and Msimbazi branches. Cross-sectional research design was used in the methodology. The sample size of 46 respondents (i.e. KCB workers and customers) was used. Data collected were analysed and processed by Statistical Package for Social Science (SPSS) computer software. The findings showed that, diversion of funds for unnecessary expansion of business and speculations leading to investing in high risk assets to earn high income (70%) and legal environment which reflects the availability or non availability of foreclosure laws and ownership rights for both domestic and foreign investors (75%) have been factors influencing NPLs. However, Morogoro branch had higher NPLs ranging from 8% to 6.5% compared to Msimbazi branch which had NPLs ranging from 7.5% to 6.2% as reported by 90% and 85% of respondents respectively. Yet, enhancing training and development options to prevent the failure (85%), introducing and implementing of an aggressive debt collection policy (90%) have been the attempts made to alleviate NPLs. The results indicate that banks need to put emphasis on reserving adequate amount of capital to improve their risk position. The research adds to the argument for enhancing training and development options to prevent the failure in assessing the capabilities of the individuals or entities to generate the interests in their loans in order to alleviate NPLs to the minimum required for the bank to perform.