An Assessment of Credit Risk Management Practices of Adansi Rural Bank Limited

Abstract

Rural banks in Ghana are not exempted from the risk exposures associated with managing credit. Given their importance to the economy, appropriate measures should be taken to mitigate credit risk exposures of rural banks in the country. The study critically examines the credit risk management practices of rural banks in Ghana making reference to Adansi Rural Bank Limited. The study was carried out to examine the credit management practices, credit policies and strategies for managing credit as well as challenges faced in this practice and to recommend solutions that will mitigate the credit risk exposures of Adansi Rural Bank Limited. The researcher used a purposive sampling technique to select a sample size of forty respondents which comprised of branch managers and credit officers from four different branches of the rural bank. The researcher used a well structured questionnaire and a face to face interview to collect primary data for this study. The researcher employed both primary and secondary data in the study. Descriptive statistical tools were used in analysing the data collected. The researcher discovered that Adansi Rural Bank Limited had implemented a rigorous credit risk management policy. This included; loan appraisal, use of collateral and checking the credit history of borrowers. The results of the study revealed that, rural banks that have implemented rigorous credit risk management policies were exposed to few challenges in managing credit risk as compared to rural banks with poorly implemented credit risk management policies. This affirms the point that a comprehensive credit risk management system should be adopted and implemented well by rural banks in Ghana.

The Role of BRIspot Application in Improving Performance in Achieving Credit Targets with Process Speed as a Mediator at BRI Mojokerto

“…The speed of the lending process refers to the extent to which a financial institution or lender can complete the procedures and requirements needed to provide credit to a prospective borrower (Odonkor, 2018). The lending process includes assessing the eligibility of the borrower, determining the loan amount, setting interest rates, as well as all other administrative stages needed before the credit is approved and funds are distributed to the borrower (Lailiyah, 2014).…”

Identifying Relevant Predictor Variables for a Credit Scoring Model using Compromised-Analytic Hierarchy Process (Compromised-AHP)

“…Studies have shown that a bank's business success and even survival depend to a large extent on the ability of the bank management to construct and implement sound policies on credit risk. Many delinquency problems could have been avoided if the management can ensure that the earlier lending processes are conducted correctly of which failure to comply will lead to lower credit scores and high likelihood of non-payment [27][28]. Thus, reviewing the key variables that should be included in the credit scoring model will lead to a better screening process with the hope to see improvement on asset quality in terms of impaired asset position, better management of credit risk, improvement of turnaround time for new application, and cost saving [16], which in all will cumulatively contribute to the development of bank efficiency and profitability.…”