Appraising of loan recovery in agricultural credit financing (a case study of Agricultural Development Bank)

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Agricultural Development Bank as a development bank was set up to mobilize loanable funds from depositors to provide financial credits to customers especially farmers to help develop the agricultural sector, the largest contributor to Gross Domestic Product (GDP). However, the high rate of default on loans extended to these borrowers visa-a- vis the poor recovery performance, is seriously threatening the basic viability of this institution causing grave concern to both management and the Government. Basically, the objective of this study was to assess loan recovery in agricultural credit financing to farmers by Development Banks and more especially Agricultural Development Bank to determine the reasons for this abysmal performance in loanrecovery in recent times which are hampering the expansion of agriculture credit financing and its repercussion on the economy, as most of these banks are distracting and alienating from this sector. It was evident from the study that the problem of loan defaults in the bank can be linked to both the Bank’s own bad banking practices on one hand and uncommitted nature of some customers on the other hand. Notwithstanding these problems, with proper and efficient functioning financial system, well trained and motivated staff, proper credit appraisal reports, early monitoring and recovery of loans will help in addressing this issue.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Business Administration, 2009