The Effects of Credit Reference Bureau Procedures on Performance of Loan Portfolio Among Listed Commercial Banks in Tanzania.

Abstract

Financial institutions are facing an enormous risk of non-performing loans, noting that larger loans have greater risk exposure to overcome this challenge, an institution is required to monitor the behavior of borrowers thus the idea of establishing Credit Reference Bureau (CRB); This study is going to assesses the effect of credit reference bureau Procedures on performance of loan portfolio among listed commercial banks in Tanzania. Cross-sectional research design was adopted in this study where both quantitative and qualitative were used to capture data through questionnaire and interview method based on 95 respondents from selected banks. The study found that procedure to accessing loans had a positive and significant relationship with the loan portfolio performance at selected listed commercial banks in Tanzania as indicated with a P- Value of 0.000 which is less than 0.05. A coefficient of 0.835, loan approval procedures was positively (β=.789) associated with loan portfolio performance which was significant with a p- value of less than 5% (p =0.001) Also quality control procedures was positively (β=.768) associated with loan portfolio performance which was significant with a p-value of less than 5% (p <0.002). In conclusion with the use of Credit Bureau its services, banks and other credit providers may assess potential clients, keep track of how well they're doing, and handle any debts they might have racked up. Finally, its recommended to the government of Tanzania should work closely with the listed financial institution on legal requirement specifically policy and procedures that will help to screen and monitor the client from the initial stage of loaning, performance screening by the aid of Reference Bureau Procedures so as to improve decision in provision of loan.