| Abstract: | Credit Risk Management becomes major discussion issues in the financial institutions
because of uncertainty related to borrowers’ business. This study of Credit Risk
Management is attempted to assess practices related to credit risk management in
Dashen Bank (DB). Thus, the rationale behind for undertaking this study was to assess
credit risk management techniques and tools that are being used and how Dashen Bank
implements those techniques, policies and procedures, as well as, to know how the bank
identify, measure, monitor, evaluate and control credit risk and to suggest possible
solutions. The study design was descriptive in which quantitative and qualitative data
sets were mixed to describe the state of affair. To this effect, both primary data survey
data (using questionnaire) and interview data were used along with secondary data. The
questionnaire was adapted from previous studies and was used to quantify the perception
of the respondents towards the credit risk management practice of Dashen Bank. Ninety
six samples were involved using stratified random sampling at head office, district offices
and branches. The researcher organized and analyzed the collected data by SPSS-23.
From the findings it is concluded that the bank has well organized credit policy and good
credit granting practice and used suitable credit risk assessment tools and techniques
and credit risk management practice. However, the bank has some pitfalls like rigidity on
the Bank’s credit policy and process. Furthermore, implementation of procedure and
credit operation manual, strategies and polices as well as credit collection techniques
are questionable. Thus, it is recommend that Dashen Bank should simplify and review its
credit manual, policy and procedure as well as ensure its implementation to become
more competitive in the banking industry and meet customer expectation. The bank
should also design and adopt credit risk model in addition to the existing model that are
more popular for credit evaluation to predict the level of risk originated from the
business perspective that can help to construct effective credit risk management
techniques. Finally, the study may provide a possible opportunity to all stake holders to
gain deep knowledge about the banks credit management practice and have important
practical implications for the bank regulators authorities and policy makers of the
bank. |
