An assessment of credit management practices in DashEn Bank

Abstract

The study examined the Credit Practice and Management of Dashen bank. It is one of private banks in Ethiopia playing an important role in the country’s economy and social life. Among the various services provided by the bank, lending has been the primary activity. Lending activities require banks to make judgment related to the credit worthiness of a borrower. However, the judgment is not always proved to be accurate and the credit worthiness of a borrower may decline overtime due to various factors. Consequently, banks face credit risks that the borrower may fail to meet the terms of the underlining loan agreement. Due to improving its service and increasing its branch networking, Dashen Bank performing well in deposit mobilizing and loan disbursement over the last decade. In the lending front, through the balance of outstanding loan has been increasing at increasing growth rate during this period. The researcher investigated the major factors which exposed the bank to risk. The research has preliminary importance to reduce the causes and problems associated with the non performing loans, and enrich and update the knowledge of the reader on the loan and advance process of Dashen Bank. The researcher used both primary and secondary data gathering method. The secondary data was obtained from different manuals, literatures & internal reports. The primary data was collected through questionnaires and interview of Credit Officials of the bank. Based on the questionnaire the primary data was gathered, analyzed and interpreted, by using explanatory types of table, graphs and percentages. Finally, it was concluded that the major problem should be solved and credit risk of the bank should be minimized. Precaution should be exercised by all credit processing and approving personnel in dealing with financial analysis. At last some viable solutions are recommended.