Credit Management Practices In Microfinance Institutions In Tanzania: A Case Of Finca And Brac Microfinance Institutions

ABSTRACT

This study has aimed at assessing Credit Management Practices in Microfinance Institutions in Tanzania, a case study of FINCA and BRAC microfinance institutions in Dodoma Municipality. Microfinance Institutions, are in the business of mobilizing and lending financial resources to borrowers and allocate of savings to real investment. In the process of providing financial services, they assume various kinds of financial risks. This study, therefore, has examined the risk factors on credit management that affected the performance of microfinance development. The study specifically has identified the impact on interest rates in microfinance institution on loan issues. However, it has also assessed the contributions of credit disbursement practices in microfinance institutions growth. The study adopted a cross sectional design to achieve in depth data. Data were collected by using survey methods where interviews were conducted to 50 implies from FINCA and BRAC microfinance institutions. The analysis of data was done by using the SPSS; where tables were used to analyze the criteria. Structured questionnaires were used to collect data from the respondents. A pilot study was conducted prior to undertaking the main study with the aim of testing the instrument’s reliability and validity. The study has found out that, the credit management practice was very important in microfinance institutions because it contributed to manage a lot of issues which took place in microfinance institutions. The study recommends that, MFIs should enhance their collection policy by adapting a more stringent policy to a lenient policy for effective debt recovery