Analytical study of delinquency management in commercial banks in Uganda: A case of Stanbic Bank (U) Limited

Abstract

The study was to examine ways of reducing non performing portfolios on Stanbic bank (Uganda) which were above the industry average. The objectives of the study were; to identify delinquency management practices in Stanbic in the period (2012-2013), to identify causes of delinquency in Stanbic bank with reference (2012 – 2013), to identify the strategies of improving loan delinquency in Stanbic bank A sample of 129 respondents was drawn from the population. The stratified random sampling technique was employed to categorize the respondents and purposive random sampling was used during the selection of the sample. The SPSS computer package was used to analyze the data collected by use of a research administered questionnaire. Findings indicate that the delinquency management practices currently being used including insurance of loans, sending reminder messages and setting realistic terms and conditions in Stanbic are not working well in reducing non performing loans portfolios. Several causes of aging portfolios including poor economic environment, in adequacy of collateral and lack of follow up measures and strategies for reducing non performing loans were strict adherence to credit policy and increase in post loan services. This contribution is will be essential for bringing down the non-performing loans in Stanbic bank and also commercial banks in Uganda which may also be facing the same challenge. Areas for further research include; there is need to explore alternatives of delinquency management including selling off non-performing assets to debt collectors, there is need to explore whether certain products offered to clients are suitable and possible discontinuation of such like credit cards, there is need to analyse whether increases in insurance premiums can be a solution in reduction of losses due to default