ASSESSING THE CREDIT RISK MANAGEMENT PRACTICES AMONG RURAL BANKS IN THE TAKORADI METROPOLIS

ABSTRACT

The study was to assess the credit risk management practices among rural banks in the Takoradi metropolis. The study was a descriptive design which targeted workers and management of Lower Pra Rural Bank, Ahantaman Rural Bank Ltd, and Fiaseman Rural Bank. Questionnaires were administered to thirty workers while structured interview was conducted for three general managers of the various rural banks. Moreover, the data were analyzed with the aid of Statistical Product for Service Solution (SPSS version 21.0) by using percentages and frequencies and presented by using tables, and charts. On the other hand, the interviews were transcribed verbatim, coded into themes and discussed concurrently with the aid of the research objectives. It was found out that, although the rural banks face similar risk in the credit environment, there is disparity as to the degree of importance attached to the various risk elements by the various banks. Moreover, each bank has its own credit philosophy, basis for lending and the critical areas of credit assessment. Furthermore, despite differences in credit policies, rural banks in Ghana adopt similar approaches to mitigating the risk involved in credit lending. Therefore, the study recommends that all lending institutions should establish a unit to handle their VAF product to minimise losses as a result of financing poor quality vehicles and machinery which end up in repayment defaults. Also, all other financial institutions which can afford should establish collections unit to closely monitor and recover all problematic credit facilities. Moreover, there is the need for rural banks to ensure that their staff receive periodic on-the-job training to apprise themselves with new ways of doing things.