Assessment of Laon Management Practice: A Case Study in Commercial Bank of Ethiopia/CBE/, Wolaita Sodo Branch

Abstract

The paper entitled loan management system in Commercial Bank of Ethiopia Woliata sodo branch aimed to assess loan management system of CBE Woliata sodo branch. Purposive sampling technique is used to select 7 employees and 3 credit customers. Both primary and secondary data were collected. Manufacturing sector, Domestic trade sector and Service sectors are the main customers of CBE Woliata Sodo branch. The bank mainly considers business plan, saved capital, financial information and collateral as criteria to approve loan. It followed fixed interest rate policy for both new and existing business a customer that is 9.5%. Supply and demand factor on the market ,unexpected decline on price because of global market ,lack of modern management in different business sectors are the factor that influence the loan repayment of customer. The major problems in loan application and repayment process are poor financial record system of the customer, using the approved loan for other purpose, holding the product by expecting to sale with higher price in future and failure to pay on time, lack of credit information of applicants such as collateral, repayment modality and failure to repay the loan as agreement respectively. Finally the researcher suggest that carefully evaluate the collateral to be offered by the business borrowers for getting loan and thoroughly inquire into the reputation and economic position of the borrower, so that the risk of default will be minimized specially in case of new borrowers. Keywords: loan, sectors, loan management etc DOI : 10.7176/RJFA/10-3-09