An analysis of the effectiveness of credit policies on loan recovery. A case study of KCI Management Consultants
- Author
- Primrose Chizenga
- Title
-
An analysis of the effectiveness of credit policies on loan recovery. A case study of KCI Management Consultants
- Abstract
- This study was aimed at evaluating the effectiveness of credit policies on loan recovery and KCI Management Consultants was used as a case study for research. The study was focused on four specific objectives; to examine the existing credit policies used by KCI, to determine the effectiveness of credit policies in reducing loan default, to establish the effectiveness of credit policies in ensuring reduction of turnaround time in loan repayments and to recommend ways on how to improve the credit policies. A review of existing literature showed that most of the studies were not carried out in Zimbabwe and they focused much on credit management and loan performance generally which created a gap between literature and this study. The study employed a descriptive research design and judgmental sampling method was used in the selection of respondents. The selected respondents comprised of loan officers, monitoring and evaluation officers as well as top management .A total of 15 respondents were selected from the Institution. The researcher only used primary data to gather information from the respondents and questionnaire were distributed to the respondents via emails. From the analysis, the study revealed that KCI has well defined credit policies which consist of credit terms, credit standards as well as collection efforts. The study revealed that credit policies are effective in reducing loan default and reducing the turnaround time of loan repayment. However, the results of the study also showed that some clients still default even with the existing stringent policies and high interest rates charged by the Institution is one of the reasons. It was therefore concluded that credit policies are effective on loan recovery. With respect to these findings and conclusions, MFIs were recommended to consider their interest charges as they have an effect on loan performance, involving relevant stakeholders in the formulation of credit policies, continuous client assessment as well as reviewing policies from time to time.
- Date
- 2022
- Publisher
- BUSE
- Keywords
- Effectiveness
- Credit policies
- Loan recovery
- Supervisor
- Mrs Mauchi
- Item sets
- Department of Banking and Finance
