Loan Recovery Research Articles

Effect of Credit Risk Management on the Performance of Commercial Banks in Rwanda: A Case of Cogebank Rwanda Plc

The research focused on the effect of credit risk management on the performance of commercial banks in Rwanda. A case of Cogebank Rwanda PLC. The study specifically analysed the effects of credit appraisal, credit risks identification, credit risks monitoring and control and credit collection on the performance of Cogebank, Rwanda PLC. The study covered the period of four years from 2018 up to 2021. In term of research methodology, the study adopted a cross section research design and used questionnaire, interview and documentation as main tools of data collection. The study adopted censes approach and considered all 35 staff from two departments accounting and credit departments which were purposively selected. Researcher also analyzed the collected data using Statistical Product and Service Solutions (SPSS). The results showed that the bank granted loans of 95.8%; 97.3%; 92.4% and 85.0% respectively of their deposits from 2018 to 2021. And looking at BNR’s regulations on the loan granting it is clear that the commercial bank must not exceed 80% of deposit collected when granting loans. From 2018 up to 2021 the ratio of Return on Equity was as following: 12.62%; 13.63%; 12.24% and 13.79% respectively. The results show the value of adjusted R2 is 0.650 implying that there was a variation of 65% of performance of Cogebank Rwanda PLC which was explained by the four credit risk management strategies adopted by the bank namely credit risk appraisal, credit risk identification, credit risk analysis, and credit risk monitoring. This implies that, credit risk appraisal, credit risk identification, credit risk analysis, and credit risk monitoring explained 65% of performance at a confidence level of 95%. This study recommends that Cogebank Rwanda Plc should improve loan recovery procedures for better loan management, should improve the implementation of guarantee policies for better loan management and since the latter has significant effect on performance of the bank. Keywords: Credit Risk Management, Commercial Banks Performance, Cogebank Rwanda Plc. Rwandan Banking Sector, Financial Stability

LOAN RECOVERY OF HIGHER EDUCATION LOANS

Higher Education Loans Board (HELB) is the major source of financing higher education in Kenya. Non-repayment of the loan among university students after they have graduated is a major drawback on funding education for other needy students. Non-recovery of loans leads to non-sustainability of the education fund which leads to a number of loan applicants unable to get the loans which are meant to assist them cater for their learning expenses. In Kenya, 40% of students’ loans are in default. The main objective of the study was to investigate the antecedents of loan recovery of higher education loans in Kenya. Specifically, the study sought to determine demographic factors affecting loan recovery of Higher education loans in Kenya, the economic factors affecting loan recovery of Higher education loans in Kenya and the loan repayment factors affecting loan recovery of Higher education loans in Kenya. The study was informed by the life-cycle model, Neoclassical development theory and ability-to-pay theory. The study took the quantitative approach drawn from the positivism research philosophy. The study targeted the quarterly data from the Higher education Loans Board for the last 10 years (from the year 2012 to 2022). Items to be collected were quarterly data on loan repayment factors, economic factors, demographic factors and loan recovery of higher education loans. The study used secondary data which was collected from the Higher education Loans Board quarterly data reports for 10 years (from the year 2012 to 2022). The data was analyzed by use of descriptive and inferential statistics since the secondary data is a panel in nature. A 0.05 significance level (95% confidence interval) was the error variance used. Results were then presented in tables, diagrams and charts. Given the economic factors, the findings revealed that inflation rate has a negative (-0.117) and statistically insignificant (p > 0.05) relationship with loan recovery of higher education loans in Kenya. Unemployment rate had a negative (-0.012) and statistically insignificant (p > 0.05) relationship with loan recovery of higher education loans in Kenya. Economic growth also had a negative (-0.114) and statistically insignificant (p > 0.05) relationship with loan recovery of higher education loans in Kenya. Given the demographic factors, the findings revealed that income level has a positive (1.181) and statistically significant (p < 0.05) relationship with loan recovery of higher education loans in Kenya. Educational Level also has a positive (0.482) but insignificant (p > 0.05) relationship with the loan recovery of higher education loans in Kenya. Given the loan repayment factors, the findings revealed that lending interest rate has a negative (-2.761) and statistically significant (p < 0.05) relationship with the amount of unrecovered loans. Interest penalty had a beta coefficient of -0.016 suggesting a negative and statistically insignificant (p > 0.05) relationship with loan recovery of higher education loans in Kenya. The study recommends HELB to implement stricter policies and regulations to ensure timely and effective loan repayments. The study recommends HELB alongside the Ministry of Finance and Ministry of Education to develop and promote financial literacy programs that target borrowers to improve their understanding of loan repayment obligations, interest rates, and financial management. The study recommends the strengthening of Financial Aid Programs which can include increasing the availability of grants and scholarships specifically tailored to support students with lower income levels or from marginalized communities.

LOAN PORTFOLIO QUALITY AND EFFICIENCY OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

This article investigates the relationship between loan portfolio quality and efficiency among quoted Deposit Money Banks (DMBs) in Nigeria. The study analyzes data from financial statements of selected banks to assess loan portfolio quality using metrics such as non-performing loan ratio, loan loss provision ratio, and loan recovery rate. Efficiency is measured through indicators like cost-to-income ratio, return on assets, and return on equity. The findings reveal variations in loan portfolio quality and efficiency among the sampled banks, emphasizing the importance of robust credit risk management practices and efficient resource allocation. The article underscores the need for improved loan portfolio quality to enhance bank efficiency, financial stability, and economic growth

Effect of Loan Repayment on Financial Performance of SACCOs in Rwanda A Case of Umwalimu SACCO Head Office

Consequently, Poor loan repayments have a negative effect on an institution's capital, earnings, and ability to achieve its goals, and they may even cause a financial institution to fail. For instance, poor loan repayment management results in losses and expensive delinquent management expenses. Such expenses have a negative impact on the income earned and, generally, the operations of the lending institution; as a result, the institution becomes financially unsustainable. The main objective of this study was to analyze the effect of loan repayment on financial performance of SACCOs in Rwanda and specific was to assess the effect of loan period on the financial performance of UMWALIMU SACCO for the period under study, to analyses the effect of loan follow-up policy on the financial performance of UMWALIMU SACCO for the period under study and to examine the effect of loan recovery policy on the financial performance of UMWALIMU SACCO for the period under study. Descriptive research design was used for this study, while Regression analysis was also employed. It provides empirical evidence suggesting two or more variables are or are not related and the researcher use a sample of 33 employees of UMWALIMU SACCO, therefore: financial performance of UMWALIMU SACCO main Branch = 16.631+ .361 loan period + .712 follow up policy +.584 loan recovery policy. At 5% level of significance all three variables which are Loan Period, Loan Follow-up Policy, and Loan Recovery Policy were positively and statistically significance since their p-values was below the acceptable threshold of 0.05. From the research findings, positive effect was found on three the variable i.e. is Loan Period, Loan Follow-up Policy, and Loan Recovery Policy with regression coefficients of 0.361, 0.712 and 0.584 respectively. These findings suggest that a unit increase in loan period, taking all the other variables constant at zero would result to a 0.361 increase in financial performance in UMWALIMU SACCO. Similarly, a unit increase in loan follow up policy would result to 0.712 increases in financial performance of UMWALIMU SACCO. A unit increase in loan recovery policy would result to 0.584 increases in financial performance of UMWALIMU SACCO main branch. Therefore, this study recommends that credit officers and credit committees should go beyond customer character before approving loans but assess other factors such as job security and the amount borrowed by the prospect.

THE INTERNAL CONTROL APPLIED IN THE GRANTING OF CREDITS AND RECOVERY OF OVERDUE PORTFOLIO OF THE COACS OF ECUADOR AND ITS ECONOMIC IMPACT

The investigation allowed to determine guidelines to carry out a technical control in the granting of credits and recovery of the past due portfolio of the Savings and Credit Cooperatives, and thus to perform an adequate management in the concession of credits and recovery of past-due loans.
 The research design was executed with the qualitative and quantitative modality, inductive and deductive method, interviews, surveys, field research and direct observation.
 With the results obtained it is considered necessary to apply correctly the methods proposed to access a credit, an efficient process for the granting of credit, and to reduce the past due portfolio it is necessary to follow up and a good analysis in its verification of credits granted as well Support to meet the needs of the partners and improve their economic stability of the Institution.
 The investigative work established that the participation of the credit and collection department of the Cooperatives and the entire work team are fundamental elements in the implementation of a system of technically designed and evaluated procedures, suggesting that control should be exercised in the placement process and Recovery of loans and stability of financial operations in order to fulfill its institutional mission of providing productive opportunities to its partners, contributing to achieve corporate social responsibility.

Loan Amount Prediction Based on Credit History and Other Variables

Loan approval is a very important process for banking organizations. The system approved or reject the loan applications. Recovery of loans is a major contributing parameter in the financial statements of a bank. It is very difficult to predict the possibility of payment of loan by the customer. In recent years many researchers worked on loan approvalprediction systems. Machine Learning (ML)techniques are very useful in predicting outcomes for large amount of data. In this paper three machine learning algorithms, Logistic Regression (LR), Decision Tree (DT) and Random Forest (RF) are applied to predict the loan approval of customers. The experimental results conclude that the accuracy of Logistic Regression machine learning algorithm is better as compared to Decision Tree and Random Forest machine learning approaches.

Credit risk management in small-scale farming by formal financial institutions during the COVID-19 era: Nigerian perspective

PurposeProviding loans, particularly to small-scale farmers, is one of the roles of formal financial institutions. Lending to small farmers is risky. An institution's health is closely related to the institution's ability to manage credit and portfolio risk. Expanding smallholder farmers' access to finance while maintaining a sustainable financial system is essential; however, pandemics present additional challenges. Accordingly, as reported in the literature, the pandemic's high loan default rates and decreases in return on assets (ROAs) call for further credit risk management research. There have been limited studies on credit risk management during coronavirus disease 2019 (COVID-19), so this article aims to provide useful information on its influences.Design/methodology/approachResearchers used data from formal financial institutions in 2018 (before COVID-19) and in 2021 (during COVID-19) to accomplish the study's broad objective. Descriptive and inferential statistics were the main analytical tools. The credit risk management indicators were categorized into collateral management, loan management, loan recovery management, governance and Information and Communication Technology (ICT). Weights were assigned to each category based on the importance to credit risk management. A binary logit model was employed in assessing the factors influencing credit risk management as proxied to loan repayment, while Ordinary Least Square (OLS) was used to examine factors that influence ROAs.FindingsOne of the most noteworthy findings is that credit risk management is affected by different factors and magnitudes before and during the COVID-19 era. Loan recovery and ICT management indicators were most influential during the pandemic. In addition, the study noted that low agricultural productivity during the pandemic contributed to an additional challenge in loan default rates because of various COVID-19-containing measures. Additionally, there was a lack of governance and ICT management capacity to drive credit and portfolio risk management during the epidemic.Originality/valueThe paper presents new empirical findings on credit risk management during the COVID-19 era. The study used a methodology which has not been used previously in credit risk management in Nigerian financial institutions. Therefore, this research could become the cornerstone of further academic research in other developing countries using this methodology.

GROWTH OF SHGS AND EMPOWERMENT OF WOMEN

Micro finance through Self Help Group (SHG) has been recognized internationally as the modern tool to combat poverty and for rural development.Micro finance and SHGs are effective in reducing poverty,empowering women and creating awareness which finally results in sustainable development of the nation.Micro finance define as efforts to improve poor people's access to loans and saving services may be the fastest growing and most widely recognized anti-poverty too. Micro finance includes basic financial services including small loans,savings accounts,funds transfers and insurance.A long side non-financial service such as business training Micro finance assists people living in poverty who wouldn't usually qualify for regular banking services because they have no form of collateral or formal identification.An attempt is made here to examine the impact of the microfinance on the development of the Self-Help Groups in India. The total number of self-help groups which have maintained savings with banks is 100 lakhs during 2018-19 but only 26.98 lakhs i.e 26.95 percent of the SHGs have obtained credit from the financial institutions.Out of 74.62 lakh SHGs,only 11.96 lakhs i.e. 16.03 percent of the SHGs have got micro-credit from the institutional credit agencies during 2010-11. The above analysis indicates that the number of SHGs which got micro credit has increased from 16 percent to 27 percent i.e only 11 percentage points increased in 2018-19 over 2010-11.About 73 percent of the SHGs are out of the purview of the public financial institutions. Majority of the women members of SHGs are away from the institutional credit agencies. These marginalized women have to depend on informal financial services for their credit needs. So that the financial informal sector (mostly moneylenders)has continued to rule in the rural economy.There is a need to break the monopoly of door step availability of credit to these marginalized sections by the informal sources of credit.The credit needs of the women members have enormously increasing for the last two decades.The average loan disbursement per SHG has increased from Rs.1.22 lakhs during 2010-11 to Rs.2.16 lakhs during 2018-19.This is inadequate to meet the credit requirements of the members in the SHGs.Hence it should be made four to five times of the micro credit per SHGs.The bank loans are not regularly paid by the members of the SHGs. Hence, the amount of loan outstanding has continuously increased since 2010-11.It is evident from the fact that the average outstanding bank loans against SHGs shows higher level.The average outstanding per SHG has increased from Rs.65,224 during 2010-11 to Rs.171543 during 2018-19,shows two and half-fold increase. As a result of it the overall NPA rate in bank loan to SHGs is steadily increasing since 1910-11. However, the overall NPA rate in bank loan to SHG is 5.19 percent as on 31-03-2019 registering a fall of 93 basis points from the previous level of 6.12 percent.The above analysis reveals that the steady declining the rate of NPA is indicating the recovery of loans made of SHGs is improving during the last few years

Role of Microfinance in poverty alleviation in Khyber Pakhtunkhwa, Pakistan (Case Study of District Karak)

This study investigates whether microfinance alleviates poverty in District Karak of KPK. The population of the study is all southern districts of Khyber Pakhtunkhwa, and the sample of the study is district Karak of KPK. The study selected 150 respondents from District Karak who had already availed of micro-credit facility and 5 staff members from the microfinance institutions. Both primary and secondary data have been used for this study, primary data was gathered through direct personal interviews and questionnaires while secondary data was collected through newsletters and published magazines. Ms. Excel and SPSS software has been used while analyzing the data. After analysis, it was found that Microfinance plays an important role to alleviate poverty by increasing household expenditure, and the income of the beneficiaries. Despite the significance of Microfinance, people are also facing some challenges like high interest rates and collateral from microfinance Institutions. Similarly, Micro fiancé institutions also face some challenges like loan recovery and most of the clients become the default. This research study concluded that microfinance has great importance to reduce poverty but needs to redesign the financial policies of the institution so that creditors don’t feel fear to pay the huge penalty in case of delay in payment.

Survival and sustenance strategy of primary agricultural cooperative credit societies in India: a fuzzy interpretive structural modelling approach

PurposePrimary agricultural cooperative credit societies (PACSs) in India are considered to be the backbone of the last mile delivery of rural credit for landless and marginal farmers and the poorest sections of the society. Contribution of PACS in social welfare is well documented. However, in spite of being such important form of organization at the grass root level, the authors find a typical baffling phenomenon which is fluctuating growth of PACS. Given that PACS have not been able to establish a consistent growth rate, thus hindering its trajectory to become a strong and consolidated organizational form, it is natural to investigate and identify those success factors that are critical for a newly formed PACS to survive and sustain. Hence it is necessary to undertake a strategic assessment of the function of PACS and hence identify those critical success factors (CSFs). This paper aims to address this issue.Design/methodology/approachThe authors review the existing literature and conduct interview with experts and other stakeholders with the purpose to gain a view of the strategic situation of PACS in India, especially with respect to their birth and death processes and identify a set of factors that are critical to the survival and sustenance of PACS. Based on the inputs from the experts, we modelled the interrelationships amongst these CSFs using interpretive structural modelling (ISM). Further, fuzzy Matriced’ Impacts Croise's Multiplication Appliquée a UN Classement (MICMAC) analysis is performed to cluster these CSFs into four quadrants based on their influence and dependence in the system.FindingsThe findings point out that a hierarchical interconnected structure exists amongst the CSFs that influence the survival and sustenance of the PACSs. “Quality and Motivation of Management” was found to be driving all other factors so far the survival of any PACS is considered. Also the authors have found that “Loan Recovery” is the most sensitive factor that needs to be taken care of for the sustenance of PACS. These findings are in the expected line and commensurate with the conventional wisdom yet to be documented till date.Originality/valueIt is a forward-looking analysis that tries to find out the CSFs for the survival of PACS in order to face the changing economic scenario of India which is still agrarian in nature. Both in terms of research question as well as methodology, to the best of the authors’ knowledge, this is first of its kind so far PACS are concerned being one of the most important but neglected entities in India; so far the last mile rural agricultural credit delivery is concerned, this study will help the policy makers to develop a holistic viewpoint in relation to long term sustenance of PACS.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2022-0331

Local Binary Pattern Face Recognition Loan Recovery System: A Case Study of Nigerian Anchor Borrower Programme

Local Binary Pattern Face Recognition Loan Recovery System: A Case Study of Nigerian Anchor Borrower Programme

The Impact of Climate Induced Agricultural Loan Recovery on Financial Stability; Evidence from the Emerging Economy Pakistan

The Impact of Climate Induced Agricultural Loan Recovery on Financial Stability; Evidence from the Emerging Economy Pakistan

Loans and Scholarships in Africa’s Higher Education Finance: A Comparative Analysis of Capitation, Policy and Recoveries in Eleven Countries

This article is a comparative analysis on financing of higher education in eleven African countries; Botswana, Ghana, Kenya, Lesotho, Malawi, Namibia, Rwanda, South Africa, Tanzania, Uganda, and Zambia. Existing trends and practices on loans and scholarships in relation to capitation, policy and recoveries were compared in the eleven countries that were also member state countries to the Association of the African Higher Education Financing Agencies (AAHEFA). Data was collected at the 2019 AAHEFA conference held in Lusaka, Zambia, where eleven chief executive officials or their representatives from country loans and scholarship related institutions shared comprehensive reports related to funding of higher education in the eleven countries. The data collected was analysed thematically. The article shows that the eleven African countries shared several similarities and differences ranging from management structures, education prioritization, capitation, recovery methods and policies. High demand for student funding against limited resources and loan recovery methods were among the emerging similarities. The differences included variations in funding patterns, policy differences among funding agencies and nebulous management structures. It argues that since most of these loans boards are in their infancy, they needed to learn very fast on how to manage granting and recovery of loans.

Nudging debtors with non-performing loans: Evidence from three field experiments

This study aims to explore how various nudges that have successfully increased the payment discipline among borrowers with performing loans affect the behavior of the defaulted debtors. In three field experiments involving 32,000 borrowers, debtors were randomly assigned to receive reminders that used personalized language, mentioned economic consequences, and prosocial motives. In one experiment, the design of the envelope varied. The experimental results show that simply nudging defaulted individuals does not work. Although every next reminder that debtors receive increases the payment rate, the effect is rather small. Moreover, sending reminders when the promise to make a payment on a debt has already been made can trigger a repeated default. I also find that a red envelope design backfires on collection efforts. The findings offer a fuller understanding of the behavior of defaulted debtors and suggest policy implications in debt repayment and recovery of non-performing loans.

Legal and Regulatory Framework for Digital Credit Providers in Nigeria: Lessons from Kenya’s Digital Credit Providers Regulations, 2022

The current issue that affects Sub-Saharan Africa is the proliferation of unlicensed digital credit providers. These digital credit providers employ the use of information and communication technology in making their loan products attractive. Their loan recovery methods are crude and life-threatening coupled with a very high-interest rate. This article discusses the current situation in Nigeria and Kenya. The Nigerian government, through joint action, carried out a raid on these digital credit providers, freezing their bank accounts and ordering that google play store and apple store should remove them from their platforms. Kenya has been able to put these digital credit providers under the regulation of the Central Bank of Kenya. In its press release dated March 21, 2022, the Central Bank of Kenya (CBK) announced the publication by Legal Notice No. 46 of March 18, 2022, of the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022. The Regulations were issued in accordance with Sections 57(1), 57(3), and 57(4) of the Central Bank of Kenya Act (the CBK Act). They provide for the licensing and oversight of previously unregulated Digital Credit Providers (DCPs). The Regulations are now operational This article examines the regulations and concludes by recommending that Nigeria should emulate Kenya by publishing Central Bank of Nigeria Digital Credit Providers Regulations.

An Examination of Bangladesh’s Current Situation with Regard to Non- Performing Loans (NPLs) and Its Effect on the Banking Sector

The purpose of this article is to investigate the extent of non-performing loans (also known as "NPLs") in Bangladesh's banking sector. Non-performing loans (NPLs) with systemic levels require a complex and expensive resolution process. In structurally weak financial systems, bank NPL issues typically appear following credit booms or extended periods of slow growth. New lending is stifled by NPLs, which harms banks' capacity to make money and stay solvent. The financial system ceases to operate regularly when high NPL levels affect a sufficient number of banks, and banks are unable to continue lending to the economy. Market dysfunction and bank coordination issues may prevent a quick recovery. Authorities typically intervene in such situations to take control of the crisis response. They can use a range of resolution tools for this purpose, but they normally demand a lot of resources and take some time to produce results. Non-performing loans are one of the primary issues that commercial banks are currently dealing with. What exactly is a non-performing loan? Financial assets known as nonperforming loans (or "NPLs") are those from which banks no longer receive interest or installment payments on time. Since the loan no longer "performs," or brings in money for the bank, it is known as non-performing (Choudhury at al .2002). Keywords: Non-Performing Loans (NPLs), Commercial Bank, Financial System, Loan Recovery Measures, Bangladesh. DOI: 10.7176/EJBM/14-22-01 Publication date: November 30 th 2022

Corporate Loan Recovery Rates under Downturn Conditions in a Developing Economy: Evidence from Zimbabwe

In this study, we design stepwise ordinary least squares regression models using various amalgamations of firm features, loan characteristics and macroeconomic variables to forecast workout recovery rates for defaulted bank loans for private non-financial corporates under downturn conditions in Zimbabwe. Our principal aim is to identify and interpret the determinants of recovery rates for private firm defaulted bank loans. For suitability and efficacy purposes, we adopt a unique real-life data set of defaulted bank loans for private non-financial firms pooled from a major anonymous Zimbabwean commercial bank. Our empirical results show that the firm size, the collateral value, the exposure at default, the earnings before interest and tax/total assets ratio, the length of the workout process, the total debt/total assets ratio, the ratio of (current assets–current liabilities)/total assets, the inflation rate, the interest rate and the real gross domestic product growth rate are the significant determinants of RRs for Zimbabwean private non-financial firm bank loans. We reveal that accounting information is useful in examining recovery rates for defaulted bank loans for private corporations under distressed financial and economic conditions. Moreover, we discover that the prediction results of recovery rate models are augmented by fusing firm features and loan characteristics with macroeconomic factors.

"A Study on Analysis of Operating and Financial Performance of Regional Rural Banks in Indian context "

The development of India's economy and rural sector depends heavily on agriculture, so it is essential to develop strategies for increasing income and creating jobs in rural areas, creating programs to reduce poverty in unbanked rural areas, and creating the right institutions and mechanisms to meet the credit needs of the rural sector. A significant step in this direction was the establishment of Regional Rural Banks (RRBs) in the middle of the 1970s. The RRBs are specialist rural financial institutions that provide small and marginal farmers, agricultural workers, artisans, and small business owners with the credit they need to grow their businesses.However, there were also commercial and cooperative banks to meet the financial needs of the rural sector. While the commercial banks' efforts to increase agricultural credit were limited by their concentration on profitability, the cooperative banks' efforts were also hindered by a number of financial difficulties. Even yet, over time, Regional Rural Banks have been able to increase their clientele, their revenue, and their ability to provide credit to the underprivileged. However, in the current environment, a number of flaws have also surfaced that have weakened their profitability and viability, such as past due, loan recovery, nonperforming assets, etc. Regional Rural Banks play a significant role in the delivery of credit in rural regions by offering credit facilities to the economically weaker segment of the population for the growth of trade, industry, and agriculture. In India's agricultural and rural development, regional rural banks are essential. Through their extensive network, the RRBS have a greater reach in India's rural areas. The financial stability of the rural areas in India is a key factor in the success of rural credit. RRBs are a crucial source of finance for rural areas, and they are in charge of providing different sorts of agriculture credit in rural areas with the loans they require. The majority of regional rural banks are currently dealing with issues including past due, recovery, nonperforming assets, and other issues. The financial performance of RRBs in India must therefore be studied. Even after 65 years of independence, 65% of the population still resides in rural areas. The strength of the rural sector is crucial to the growth of the rural economy. The Indian government has initiated and carried out a number of policy measures. However, poverty, a lack of access to clean water and sanitary services, subpar housing, high rates of illiteracy, and other comparable economic and social disadvantages continue to plague rural India. One of the fundamental engines of economic expansion is the banking sector. Given that it is a crucial link in numerous socioeconomic operations, it must be stable. The GOI established the Regional Rural Banks (RRBs) in 1975 in accordance with the requirements of the ordinance proclaimed on the 26th September 1975 with a view to thriving the rural economy. The share capital of RRBs was financed to a percentage of 50% by the Government of India, 15% by the relevant State Government, and 35% by the bank that sponsored the RRB. The RRBs can only operate in certain districts in a State that have been notified. The RRBs generally collect deposits from rural and semi-urban areas and lend money largely to small and marginal farmers, agricultural laborers, rural craftsmen, and other priority sector sectors. RRBs have more access to rural areas and are crucial to India's development of its rural areas and agriculture industry. The primary goals underlying the establishment of this sort of dynamic institution in India were to create a connection between rural households and banks, especially in banking-deficient areas. Additionally, to promote rural savings, create job possibilities, and offer more affordable loans to rural India's marginalized population.

The Reality of Credit Risk on Threat of Financial Performance of Tier IV Commercial Banks in Kenya

Purpose: Commercial banks in Kenya have put in place several credit policies and strategies to reduce non-performing loans. The capacity of a bank to grow its loan in the year is largely determined by its asset quality and efficiency. Regrettably, the measures put in place by many banks to improve asset quality and efficiency seem to bear little fruits particularly in tier IV commercial banks have been recording declining performance over the recent past. The aim of the study was to establish the influence of credit risk on financial performance of tier IV commercial banks in Kenya.
 Methodology: The study was guided by scientific theory of management, Transaction cost theory and Contingency theory. This study employed longitudinal research design. The target population was 13 tier IV commercial banks in Kenya as at 2022 from Central bank of Kenya website. A secondary data collection sheet assisted in tabulating secondary data from audited financial statements which were downloaded from the Central Bank of Kenya website. Panel Data analysis technique was employed to establish the relationships through STATA.
 Findings: Pearson’s product moment correlation coefficient depicted r = -0.4306, p-value of 0.0000 which is significant for credit risk. The regression model had a p-value of 0.0000, indicating that it was significant and reliable. An R2 of 0.3799 was produced by the random effect model indicating that financial imperative contributes 37.99% to financial performance of tier IV commercial banks. The regression coefficients were -0.13 with a p-value 0.004< 0.05), credit risk (CR) and financial performance (ROE) at 5% level of significance. These results indicate that credit risk had significant influence on financial performance.
 Recommendation: It was recommended that commercial banks should properly manage credit risk; prompt recovery of loans is also recommended to reduce loan impairment charges.

Loan Repayment Performance of Smallholder Farmers: The Case of Oromia Credit and Savings Share Company in Tole District of Southwest Shoa Zone, Oromia Regional State, Ethiopia

The aims this study is to identify those factors that affect loan repayment performances of smallholder farmer in Tole district of Southwest Shoa zone, Oromia regional state of Ethiopia. In order to address the stated objective data were collected through survey of 174 sample borrower farmer. To identify and analysis factors affecting loan repayment performances and intensity of loan recovery in the district two-limit Tobit model were used. From the total sample borrower farmer, 9.2%, 20.7% and 70.1% were complete defaulters, partial defaulters and non-defaulters respectively. A total of 17 explanatory variables were included in the analysis from which family expenditure and repayment period suitability affect loan repayment performance and intensity of loan recovery of the sample borrower farmer significantly and negatively. On the other hand, size of land holding, income from on-farm activities, income from off-farm activities, household saving and frequency of extension contact had a significantly and positively affect loan repayment performance and intensity of loan recovery of sampled smallholder farmer in the study area. Therefore, each concerned body aimed to improve loan repayment performances of smallholder farmer in the study area could be successful if they consider these factors. Keywords: Ethiopia, Loan, Non-defaulter, Tobit DOI: 10.7176/RHSS/12-13-04 Publication date: July 31 st 2022