Credit management practices of Suma Rural Bank Limited

Abstract

Credit is the largest asset and the main source of income to Rural Banks in Ghana, notwithstanding the associated risk. Like any other business, it is risky and expensive to manage. So it is with managing credit portfolios. The study sought to evaluate how credit is managed in Suma Rural Bank Ltd. It also examined whether the performance of credit or loans was in line with the benchmark set by the Bank of Ghana. Additionally, it examined the measures used in ensuring effective and sound credit practices, the extent to which the banks educate and supervise the customers and problems encountered in recovering the loans granted by the bank to its customers as well as the customers’ satisfaction with services provided by the bank. Using the survey design, structured questionnaire and purposive sampling strategy, primary data was collected from a sample of 150 respondents. The study showed that the bank had higher default rate, hence, operating far below the Bank of Ghana benchmark recovery rate. It was recommended that the bank should adopt innovations to improve on the quality customer service delivery such providing in-service training for staff, speed up the duration in disbursing loans, and increase customer education and advisory services, strengthening the monitoring of the ongoing work of debtors among many others.