Evaluating the State of Loan Repayment on Management of Microfinance Institutions: A Case of National Microfinance Bank, Tanzania

Wilfred, Consolata (2013) Evaluating the State of Loan Repayment on Management of Microfinance Institutions: A Case of National Microfinance Bank, Tanzania. Masters thesis, The Open University of Tanzania.

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Abstract

This research has examined the way loans repayments are managed at the National Microfinance Bank Headquarters Dar es Salaam. The idea came up as a result of analyzing loan repayments basing on facts found through Observation, Interviews and Document analysis conducted in the department concerned revealed the need to understand fully the management of loan repayments and how to improve the same. For the effectiveness of the research, the researcher used a research design and data collection and analysis were used to arrange the information in such a way that enabled the researcher to come up with the reliable recommendations and conclusions. Different methodologies were employed which were research design, study population, sampling design, research instruments and analysis of data where the researcher used pie charts, and presentation done in bar graphs. It was realized that the performance of any micro finance institutions as far as loans are concerned depends on its existing loan process or rather policy at any given time period thus NMB use loan process to evaluate the credit worthiness of its customers hence this has enabled the bank to run smoothly and effectively. It was also found out that NMB uses collateral/security policy which helps them to rate the credit worthiness of its customers. Collateral policy also helps the bank to reduce the defaulters and the NMB keeps and check the financial records of their clients. Despite the good performance of NMB due to its credit policies, the bank had however faced some challenges’ which had hindered their operations hence this has caused bad debts in the bank. These are improper appraisal, conmen, poor supervision, political influence, weak legal system, diversion of funds, non- compliance and poor payment.

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