Assessment of Non-Performing Loans: The Case of the Commercial Bank of Ethiopia

Abstract

This study intends to assessment of nonperforming loans. The mixed research approach was adopted for the study. Survey was conducted with professionals engaged in Commercial Bank of Ethiopia holding different positions using a self administered questionnaire. The study found that poor risk assessment and unsound lending practices, lack of focused loan monitoring and follow-up, compromised integrity, and fund diversion as the major factors that contribute to loan default. The study suggest that Bank should put that proactive follow-up and monitoring system to monitor loan performance and check continued viability of operations, clear policy framework and working procedures that effectively address the issues of KYC, Develop and put in place framework for the entire credit management process and set objectives, standards and parameters to guide credit personnel in the overall credit processing, Provide training and development to employees involved in credit operations to enhance the aptitudes and abilities of every member