A Loan assessment system for Centenary Rural Development Bank

Abstract

The study on Centenary Rural Development Bank which focused on analyzing the loan assessment system was carried out purposely to overcome the challenges that are currently being experienced as a result of lack of good decision making mechanisms in disbursing loans. The study has pointed out the intensity of the loopholes within CERUDEB’S loan assessment system and a prototype of the new system has been built together with the policy in place to assist in addressing the problem. To address the problem, a structured approach to analysis and design of systems was followed in the development of the prototype. The main methodology used was the research approach where an interview guide was designed to elicit data required on critical issues towards establishing a loan assessment system for Centenary Bank. Documentary reviews were done to obtain information on critical issues considered in designing an efficient loan assessment system for the bank. Among the documents reviewed were the operation manuals, minutes of management meetings, brochures, prospectus, software manuals, books, abstracts and articles from the Internet. These various documents provided opportunities for making in depth understanding of the loan assessment system and identifying the missing parameters. The above methods helped in achieving the objectives of the study as stipulated in chapter one. The findings of the study showed that, the loan assessment system in place is time consuming as it takes too long (up to a month) for a loan to be approved and the amount approved is too little (sometimes less than 50 percent) compared to what a client applies for. The officers also identified these as complaints raised by a big percentage of customers and revealed that this is as a result of bias which is inherent in individuals. The study also revealed that, if customers do not bribe officers, the loan may take too long or may never be approved. On the side of credit officers, they complained that the system is cumbersome in terms of computations made that are required for proper assessment and that it is composed of so many redundancies. A suggestion from system users such as managers, credit administrators, supervisors and credit officers was that a new system which can address the missing links be put in place so that the problems that are currently being experienced because of system weaknesses can be overcome.