ASSESSMENT OF 5C’s CREDIT APPRAISAL TOOLS AND THE LEVEL OF NONPERFORMING LOANS AND ADVANCES-IN THE CASE OF NIB INTERNATIONAL BANK SC

Abstract

The study was geared towards discovering the use of 5C’s credit appraisal techniques in the approval process of loans and advances and evaluate the nonperforming position of Nib International Bank S.C. The study was conducted through a sample base on 120 respondents (branch managers, division managers, loan officers, customer relations managers, credit analysts and loan follow-up officers) working in branches dispensed throughout the country and at head office. Data was collected using a structured questionnaire. The data collected was analyzed by descriptive statistics. SPSS version 20 was used in capturing and building the data analysis. The findings of the study were that; NIB International Bank S.C. uses the 5Cs credit appraisal tools in credit risk, evaluation, assessment and appraisal processes. To remain affluent in business, commercial banks should use the 5Cs credit appraisal tools considering that, credit risk is the major risk that banks attach a lot of importance to. It should be noted that most bank failures worldwide have been attributed to poor credit policies they have employed in their businesses. NIB International Bank S.C. applied the 5C’s credit appraisal techniques in credit risk assessment and appraisal processes and the use of the 5Cs credit appraisal techniques enabled it to make remain constant the level of nonperforming loans and advances. Collateral was uncovered the most significant of all the credit appraisal variables followed by the character, capacity, capital and condition