Abstract:
Core income generation source for any commercial bank is “Lending”. The asset value of a bank is several times of its equity. The largest portion of asset base of a bank consists of advances to customers. Non Performing Advances are the main threat to an asset base of a bank. Deterioration of even a small portion of its asset base would severely impact the equity and the stability of a bank. Hence, Key function of any bank is managing Non-performing Advances. The purpose of this research is to identify factors affecting to Non-Performing Advances in the perspective of Lending Officers context. Identified four factors by the author are Training and knowledge of the Lending Officers, Risk assessment, Monitoring and follow up and financial stability of the borrower.
The principal under the research is common to all commercial banks in general. The survey was carried out using Simple random sampling method for selection of Lending Officers. Quantitative method was used to gather data through a selfadministered questionnaire. Relationships for the identified factors were analyzed using SPSS 17.0 software through Spearman’s coefficient of correlation. Recommendations of the study are that Non-performing Loans could be managed through enhancing the Training and Knowledge of Lending Officers by adequate credit exposure. Further, it is recommended that, bank need to consider Risk assessment and financial stability of the borrower. Also, continuous monitoring and follow up of Loans.
