| Abstract: | This study was carried out in Oromia International Bank, Nekemte
branch. It was based on primary data collected through questionnaire
survey from 21 employees working in loaning unit of the Bank. The study
also used secondary data collected from financial statements, quarterly
reports, annual reports, credit policy and procedure. Descriptive research
methods were employed to identify the loan recovery performance of the
Bank. The assessment result showed that the loan repayment period,
assessment of customer credit history, collateral estimation, project follow
up, monitoring and controlling system, delays to decide on non-performing
loans h a v e affected the loan recovery performance of the Bank. The
study was very importance to measure whether OIB have adequate policies
& procedure manuals, whether the credit unit verifies outstanding liabilities
of the borrowers before additional and new loans are granted, the
existence & adequacy of feasibility study, whether the bank has a proper
way of gathering credit information internally & externally. Inadequate
credit policies and procedure manuals, unrealistic loan repayment period,
inefficient analyses of customers’ financial statement and absence of welldesigned
project follow up system were the major finding of the study.
Based on these findings, I recommended the bank to exert maximum
efforts to be updated & review the credit policies & procedures manual
frequently as the policies & procedures of the bank are outdated and do
not consider the current situation, Furthermore, the bank loan repayment
period should consider the nature and cash flow of the project in order to
collect the loan as per the repayment schedule instead of performing based
on assumption and in terms of loans period. The study will help to enhance
the efficiency and effectiveness of loan administration operation &
provide different methods and ways to safe guard asset (primarily loans),
adequacy, and accuracy of its loan review function; promote to comply
with management policy, procedure, applicable laws, and regulation |
