Assessment of loan advancing procedure and practice

Bank Lending policy is a statement of its philosophy standards and guidelines that its employees must observe in granting or refusing a loan request. These policies determine which retail or corporate clients the bank approved for loans and which will be avoided and must be based on the bank lending laws and regulations. The banking industry plays a major role in economic growth and development through the provision of credit to execute economic activities. However the major concern of any lender while advancing credit is how they will get their money back. This study assesses lending policies and their impact on the levels of loan loans recovery and related issues in Wegagen banks Mekelle branch. A descriptive survey was employed in this study with the population of interest of being the loan officers of Wegagen bank Mekelle branch. A questionnaire was used to gather primary information. The study found that lending policies and procedures and repayment performance are indeed related. Lending policies help the banks lend prudently and lower the risk level to the bank and strict adherence to lending policies therefore has led to reduced non-performing loans.