Credit risk management in Tanzania postal bank.

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University of Dar es Salaam
The intention of this study is to provide information that is necessary to asses the risk position of the credit structure and its possible influence on the performance of the FI. But in performing its duties a FI, as the lender of money requires an assurance that the money lent will be returned. Therefore to expect a saver to receive back less than the result of this sacrifice is clearly unrealistic. That is where the whole issue of this study lie, that the lender possesses a high risk of loans defaults. Default among credit customers was investigated and the bank staff so as to make possible an understanding and analysis of the problems in loan recovery and try to formulate effective policy and recommendations for future action. A total of 71 respondents were interviewed, which consist of 34 TPB credit officers and 38 borrowing customers. A number of periodical and annual reports were provided by the bank management to supplement the available primary data. The study intended to show that the use of proper lending regulations, guidelines, principles and procedures when followed will improve and sustain the well being of the bank and the community it saves at large with good management quality. Based on the results it can be concluded that the principal objective of the research have been met. The results show that loans default is one of the problems that stagnate (hinder) the development and well being of the bank (TPB). Loans default is caused by poor loan supervision and inadequate management quality that exist in Tanzania Postal Bank. There is significant relationship between loan concentration and loan defaults by customers. Loan evaluation methods and procedures used by TPB credit officers are the cause of loan defaults in the bank's lending business. The study recommends that more efforts should be put toward reduction of credit risk through risk diversification methods rather than loan concentration to a single borrower or economic activity. The bank should train staff on evaluation and appraising methods. Collateral estimation standard should be applied; proper collateral value should be placed so as to secure a loan. A fully secured loan requires a 125% collateral. The bank should issue loans only to credit worthy customers and also the bank should use protection instruments against credit risk like insurance and financial derivatives.
Postal Savings Banks, Credit management
Mwaisekwa, K. L.(2004). Credit risk management in Tanzania postal bank. Masters dissertation, University of Dar es Salaam. Available at (