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.
Digitized by Sam Jonah Lib
