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Tanzania: Banks Need to Reduce Credit Risks 

December 6, 2016


Lending is the backbone and core business of commercial banks. Yet the portfolios have proved to be the source of recurring problems and cause for failure of many commercial banks.

Credit portfolio management grew out of the need to improve the financial performance of the large corporate loan portfolios in commercial banks. In addressing the shortcoming, the Bank of Tanzania (BoT) challenged financial institutions to reduce credit risks that will result into lowering lending cost to benefit more people.

"Cutting down credit risk will enable banks and other financial institutions lend more to the private sector and reduce reliance on the safety of public sector credit market," said BoT Governor Prof Benno Ndulu on the 18th financial institutions conference concluded recently in Arusha.

Substantial number of banks has failed mainly because of the challenges related to risk management of credit portfolio.

It is important to the bankers to understand all risks embedded in loaning business and their potential impact on the institution. Read more

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