Assessment of Credit Risk Management Practice in Case of Bunna Bank
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Date
2022-06-05
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Publisher
A.A.U
Abstract
Credit risk management becomes major discussion issue in the financial institutions because
of uncertainty related to borrowers business. The aim of this study is to assess the practice of
credit risk management of b unna bank. In order to address this objective, the study targeted
credit and loan department and district officers who currently work at the head office and of
the bank and collected primary data. The primary data were collected through
questionnaires. The study distributed 69 questionnaires from which 47 questionnaires were
collect filled and returned. The collected data was analyzed using descriptive statically tools.
The findings showed that there is the well-designed credit risk strategy and policy that clearly
indicated and recognized areas of credit engagement and the risk inherent in these
engagements. The findings also indicated that respondent employs believed there is a good
level of credit appraisals and granting process at the bank that check borrower’s history,
financial condition and collateral requirements. Before granting loans furthermore the study
showed that b unna bank was appropriate internal risk scoring system. Employee risk based
scientific pricing and has an independent risk management function but results also indicated
there is a room for improvement with regarding to monitoring activities undertaken at b unna
bank. In line with the findings of the study, it was suggested to the bank to enhance its
monitoring process by regularly inspecting the business of clients after granting credits,
develop different type of credit facilities to the borrowers as per the potential borrower
preference and assess borrowers past financial history, credit worthiness.