Assessment of Credit Management practices in micro finance institutions a case study of Addis Credit and Saving S.C.

Abstract

This study was aimed at assessing the effectiveness of credit management systems on loan performance of microfinance institutions a Case Study of Addis credit and saving S.C. and is an attempt to indicate the importance of credit management in financial institutions such as micro finances and others. Thus, the rationale behind for undertaking this study is to deeply investigate the causes of credit management practical problems and to suggest the possible solutions that enable the micro finances to run its operation in a safe way as credit is known to be the main stay of all micro finances. The main objective of the study is to evaluate the performance of credit management practical problem of Addis credit and saving S.C. For the purpose of the study both primary and secondary data are used. Primary data is collected using structured questionnaires. The secondary data is collected from annual reports, directives, and bulletins of the micro finance. Descriptive statistical tools are used in analyzing the data collected. Hence, the nature of the Study is descriptive. Finally, based on the findings possible recommendations are given. These include the issues of rising loan clients complaint on the micro finance regarding the valuing of properties offered for collateral, lengthy of loan processing, amount of loan processed and approved, Frequent follow-up and supervision, loan period, giving them a discount, Increasing the penalty rate and discretionary limits affecting the performance of credit management