Examining loan appraisal procedures by commercial banks in Uganda. A case study of Barclays Bank Uganda

Abstract

The study covered the following objectives; to establish the loan appraisal procedures in commercial banks in Uganda; to establish the challenges of loan appraisals in commercial banks in Uganda; to design strategies of improving the loan appraisal process in commercial banks. Using a self administered questionnaire, a sample of 50 respondents was taken from Barclays bank Uganda staff members in order to obtain primary data. The study was analyzed using descriptive statistics such as frequencies, percentages, means and standard deviation. The study revealed that Barclays Bank has a credit policy, and this policy is implemented by the staff members. During the study it was also revealed that Barclays Bank does not follow up clients to ensure proper investment of borrowed funds. In this study, it was discovered that Barclays has a loan recovery process in place. The main challenges were; interest rates charged to clients are high compared to their earnings; given loan recovery process it is still difficult to recover bad loans. Also during the study, there were proposed strategies; the bank should improve information systems and processes to enable clients acquire loans in a range of 1-3 days; the bank should reduce interest rates, the bank should empower branch managers in decision making ; there is need to carry out massive sensitization of borrowing for clients.