Factors Contributing to Nonperforming Loans in Non Banking Institutions in Tanzania: A Case of National Security Fund

Barongo, Wilfred Modest (2013) Factors Contributing to Nonperforming Loans in Non Banking Institutions in Tanzania: A Case of National Security Fund. Masters thesis, The Open University of Tanzania.

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Abstract

Pension Funds’ statutory contributions from members must be prudently invested to conserve money value and those members are availed with benefits when they fall due in the future. One of the frequently given reasons for inadequacy of benefits in Tanzania is inappropriate investment such as loan provision which mostly result into nonperforming loan. The case study was carried at NSSF head office, Kinondoni and Ilala Regions offices in Dar Es Salaam City to investigate the factors contributing to nonperforming loan in non-banking institutions in Tanzania. The specific objectives were, to assess efficiency and usefulness of loan appraisal techniques used for qualifying borrowers, examine investment officers’ performance on assessing borrowers and examine loan policy efficiency as guiding tool for decision making. The study found out that the inadequate investment analysis, government intervention, few loan/investment officer compared to the workload, lack of knowledge on investment appraisal techniques for investment officers, inefficient loan policy as well as inefficiency of monitoring mechanism in assuring timely loan repayments are factors leading to increasing trend of nonperforming loans. Therefore recommended that the organization should limit investment in the loan portfolio by providing loans to the project with attractive returns but with low risks (minimal), to conduct constant monitoring and evaluation (investment auditing) for each investment as well as to equip loan/investment officer with different loan appraisal skills by ways of training. From the management point of view loan recovery should not be relaxed by a single moment. Relaxation mostly is observed in nationalized financial institutions therefore it is recommended to engage recovery agency.

Item Type: Thesis (Masters)
Subjects: 600 Technology > 658 Gerneral management
Divisions: Faculty of Business Management > Department of Accounting and Finance
Depositing User: Mr Habibu V. Kazimzuri
Date Deposited: 14 Jan 2016 12:00
Last Modified: 14 Jan 2016 12:00
URI: http://repository.out.ac.tz/id/eprint/847

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