An assessment of the effectiveness of strategies adopted to manage NPLs by commercial banks: case of FBC.

Abstract

The study assessed the effectiveness of NPL strategies adopted in managing NPL by commercial banks using a case of FBC. The main objective of the study was to assess the effectiveness of strategies used by FBC bank to manage Non-Performing Loans. the main hypothesis stated that the NPL strategies are effective in the management of NPL by commercial banks. The study adopted an explanatory research design which took the form of a survey. Stratified sampling method was used and the data was obtained through the use of structured questionnaires to a chosen sample. The questionnaires in the form of a five point Likert Scale were submitted via email and some were submitted by hand delivery to all the chosen employees of FBC around the country. the collected data was analysed using a statistical package for social science (spss) version 23.0. The analysed data was presented in form of statistical tables. the major findings concluded that the factors for the effectiveness of NPL management performance indeed affected the NPL performance. However the Internal processes and credit monitoring policies are seen to be effective and RBZ initiates was not. These results are imperative in the strategy formulation of a credit department of a commercial bank. RBZ is deemed to be insignificant to the managing NPL performance. the theoretical contribution of the study were the fact that it produced a conceptual basis for the future researchers to examine further the factors affecting NPL. The major policy recommendation was the support and adaptation of the Credit monitoring policies and internal processes since they heavily determine the NPL performance. the study then concluded by giving recommendations for future studies.