Credit risk management in commercial banks: a case of Tropical Bank Uganda Limited
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The study looked at credit risk management in commercial Banks with specific interest in Tropical Bank Limited. The study was guided by three specific objectives; to determine how Tropical Bank Uganda Limited is accelerating the performance of credit risk management in line with its policy and the banking industry standards, to examine the different credit risk management strategies used in commercial banks and to determine how Tropical Bank Uganda Limited consistently complies with its policy and procedures in entertaining its loan applicants, loan processing and collecting. The study adopted a descriptive research design based on both interviews and questionnaires and below were the findings;the study revealed thatan important part in making lending decisions within Tropical bank majority were in agreement and Tropical bank has played a center role in ensuring credit risk mitigation in the bank. On the statement stated as financial statements of different companies, these are considered as vital when issuing credit; on which majority agree to. Credit Quality Reports and use of derivatives to manage Credit Risk are done regularly. And the methods used to quantify credit risk are accompanied by a special transparency requirement, including a quantitative assessment of the methods accuracy and a statistical method property known as robustness. In conclusion the current loan processing and approving direction of the bank is moderate and inclined towards conservative especially regarding collateral and analysis. This is highly retarding the loan growth of the branches in particular and the Bank in general. Hence, the bank should follow creative way of loan processing and approving direction that assists to meet the loan demand of potential loan applicants and the required level of loan growth as it is the main source of income for the Bank. The study recommends that credit policy and procedure of the Bank should incorporate the ideas of the clients and employees to become more competitive in the banking industry and meet its vision.