The Effects Of Credit Policy On The Performance Of Micro Finance Institutions In Kamuli District. A Case Study Of Finca Branch

ABSTRACT

The study was to establish the relationship between Credit Policies and Performance of the

Micro Finance Institutions in Kamuli District, Finca Branch. The study was based on three

specific objectives; to find out the relationship between character and performance of MFIs, to establish the relationship between collateral and performance of MFIs and to establish the relationship between capacity and performance of MFIs. It was based on a descriptive survey research design basing on the use of qualitative and quantitative approaches that was adopted to

establish the relationship between Credit Policies and Performance of MFIs at Finca bank

Kamuli branch. A random sampling system used in the study. Questionnaires were used to

collect primary and secondary sources of data from 50 out of 60 respondents, using simple

random sampling. Data analysis was done using SPSS’s frequencies and percentage means.

Finally the report looked at the study results and gave the discussion of each finding. Therefore,

here, data analysis, procedures and response rate are focused on. Then the findings conclusions

and recommendations are presented. The report also showed the work plan for the whole

research, the budget as distributed right from the topic inception up to research presentation, the

questionnaire and finally the observation guide. According to the objective one it was noted that,

character and performance of Micro Finance Institutions in Finca bank, Karnuli district showed a

positive impact to clients in that client do their level best to improve their character with

commercial banks at the rate of 59% who strongly agreed and the client’s character of being

potential to borrow depend on business size at the rate of 51% who agreed which indicate that

there is a progress to people who around the place who use this services. According objective

two MFIs which indicate collateral and performance of MFIs. It indicated that, summary finding

has significant negative impact of Interest Income to Total assets on the bank’s performance thus

the MFIs benefit from the client’s collateral offered by the client at 73% , MFIs confiscate

presented collateral in case you fail to repay back the loan and also MFIs have challenges on

client’s security offered in securing the loans at the rate of 49 0~ who strongly agreed this

indicates the credit policy and performance of MFIs have left people’s livelihood in danger that

is to say many household’s properties have been confiscated from people in Finca bank Karnuli

branch. According to objective three about the relationship between capacity and performance of

MFIs indicated that, capacity and performance of commercial banks according to the findings

indicated credit policy encourage clients to borrow were 73% of the respondents strongly agreed,

the policy limit borrower’s capacity from borrowing were also 73°o strongly agreed this

indicated that is progress in the capacity and performance of MFIs in Finca bank, Kamuli

district. We obtained the findings and analyzed the data by use of tables and charts which helped to present data and arrive at conclusion and recommendations. I therefore welcome you to have a humble time in reading this work. There are new and knowledge building findings in the work, a lot of inspirations.