Factors affecting timely payment of loans in Uganda; a case study of Centenary Bank in Makerere University
Kalule, Emmanuel Micheal
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This study sought to examine the factors affecting timely payment of loans in Uganda; a case study of Centenary bank–Makerere branch. The specific objectives of the study were: to examine the extent of loan repayment, to find out the extent to which borrowers factors affect loan repayment among customers and to examine the relationship between interest rate and loan repayment at Centenary bank–Makerere branch. The study employed both qualitative and quantitative methods to analyze the data. Data was analyzed using descriptive statistics. Qualitative approach provided ways of discerning, examining, comparing and contrasting, and interpreting meaningful patterns or themes. Qualitative approach involved examining the assembled relevant data to determine how research questions were answered at hand. Quantitative data analysis helped to analyze and categorize frequencies and percentages. Simple descriptive tabulations were used for quantitative analysis. Study revealed that working out problem loans is one step towards loan recovery. It requires giving clients facing difficulty in repaying their loans periods of extension of credit repayment to enable them pay their bills. This further involves credit rescheduling and pursuing guarantors to help pay the defaulted credit. However, the study revealed that the major cause of default in credit recovery emanates from the weak internal control systems inhibited by these indigenous banks coupled with the unrealistic returns expected from their loan portfolios which force them to hike interest rates making it very hard for the customers to repay their credit. This study recommends that there is a need to consider the educational level of borrowers or their managers in the credit policy of the bank and it should be given high emphasis before the loan is disbursed. Additionally, for the borrowers who already take loans from the bank, provision of entrepreneurship trainings during follow up or with in some arranged time will help the borrowers to repay their loan successfully.