| Abstract: | Loan recovery is a very essential component for the performance of banking institutions as it
plays a key role in ensuring the major goal of the bank that is to issue loans that results into the
preferred outcome of making a profit margin beyond the loans advanced.. Therefore the purpose
of undertaking this study is to describe the loan recovery performance in Wegagen Bank S.C and
to see the loan recovery performance in relation to credit assessment, loan follow-up, collateral
and workout and to suggest possible solution. The study is based on primary data collected
through questionnaires survey from 84 employees by using censes method working in loaning
unit of the Bank which are directly involved in credit processing and administering because they
would better be able to assist with the relevant research data and un-structured interview for
some staffs in credit area of the bank. Based on the nature of the study the research design is
descriptive research method. SPSS statistical software is used to analyze the data collected. The
research found that lack of financial follow-up, absence of scheduled physical follow-up, lower
budget for loan monitoring, collateral miss estimation, unavailability of additional collaterals,
lack of marketability for collaterals, collaterals with high depreciable values, fraud made by
some dishonest staffs, complicated collateral estimation procedure and Inefficiency in
implementing detailed workout strategies are factors that decreases the loan recovery
performance of the bank . Positive note the banks credit policy and procedure is in line with
NBE’s rules and regulation and have good legal follow-up that can enhance loan recovery
performance. Finally based on this findings recommendations are given. These includes improve
the credit assessment, give advisory service to its customer, provide adequate budget to loan
monitoring, insist the staffs to strictly apply its credit procedure manual, revise complicated
collateral estimation manual and prepare an action plan for the reduction of NPL . |
