Assessment of the credit risk management practices of National Investment Bank Ltd.

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JULY 2015
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Credit risk management is a very essential model for any financial institution. This is because the business of granting loans by these institutions involves the corporate cost of holding risk. The banking industry in Ghana though making gains; experience the setback of credit risk. As a result, the study assessed the credit risk management practices of National Investment Bank Ltd. The research was an attempt to assess the extent to which the implementation of various credit risk management practices by the bank has reduced the amount of non-performing loans. In order to answer the research objectives, the case study approach was employed questionnaire as well as face-to face interview was conducted to collate the views of senior credit officers and customers of the National Investment Bank Ltd. on credit risk management practices. Besides, information on non-performing loans was obtained from the books of accounts while the researcher also relied on data from NIB annual reports and credit policy documents for analysis. The results from the study showed that National Investment Bank has a clear, written guideline on credit risk management with the board of directors having an oversight responsibility for implementation. It was revealed that the implementation of credit risk management by NIB has imparted positively on the loans as evident in the decline in the non-performing loans of the bank. Credit policies and procedures are periodically reviewed by the board to ensure that appropriate internal controls have been established. It is recommended that the bank tighten the credit policies to ensure a further decline in the non-performing loans to achieve the 1% impairment loss as required by the regulator.
A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Master of Business Administration (Accounting Option)