ABSTRACT The research topic is “The factors affecting debts collection in financial institutions A case study of NMB Kenyatta Road Branch, Mwanza”. The research objectives on this study were to identify the factors affecting debts collection in Kenyatta road branch, Mwanza being my general objective and the following being my specific objective. To examine techniques used in managing debts, to examine the procedures used by NMB to collect debts, to evaluate whether NMB collateral condition are favorable or otherwise and to examine whether the interest rate charged is fair to their customer. The study includes the use of questionnaires; and these were used to communicate between researcher and respondent, observation (participatory) was used and interview (structured) were used to gather data from primary data. NMB’s loan report and written documents were also used as secondary data sources. The researcher found the following key findings. Diversion of fund, poor collateral, economic reasons, high interest rate, as the factors affecting debts collection problems. The research concludes by noting that there are factors affecting debts collection in financial institutions which are: high interest rate, strictly means and techniques, diversion of funds, poor collateral, poor handling of debts when one of the customer moves, and lack of cooperation between financial institutions, and inadequate auditing standard. The researcher recommends that: The management should establish more controls over debts in order to reduce the risk of unpaid debts by lowering their interest rate to their customers so that they can be able to repay their debts. More training is still needed to customers and loan department staffs so as to improve the quality of debts. New method of debts collection like personal visit is more needed rather than letters and faxes.