“Practices, Challenges and opportunities in delivering credit service after transforming Micro Finance Institution to formal bank: Case of Siinqee Bank Share Company”

Abstract

The aim of this study was to investigate the practices, Challenges and opportunities in delivering credit after transformation of Micro Finance Institutions into commercial bank, Case of Sinqee Bank Share Company. The study was conducted using a descriptive survey research design to attain this study. The study employed qualitative research methodologies to gather and evaluate both primary and secondary data sources. For the study, one hundred twenty two employees were chosen from among 573 employees at head quarter of Sinqee Bank Share Company, the sample included managerial and none managerial employees. The primary data was obtained using predesigned questionnaires from Micro Finance Institutions management, supervision, while the secondary data was obtained through documentary reviews. The sample approaches were simple random sampling. The data from the questionnaire was encoded; stored and analyzed using descriptive analysis technique, standard deviation, descriptive mean, distribution tables and percentiles. The study findings indicated that, major factors that impacted the process of transformation of Micro Finance Institutions are cost of loan processing, Cost of staff training, Quality and integrity of collateral asset estimation team, preparedness of loan officers and managers in processing Micro Finance Institution & none Micro Finance Institution loan products and human resource. Micro Finance Institutions seeking to transform to banking business license should therefore prepare business plan and feasibility study, prepare detailed and prudent strategy, meeting minimum cost training, standard quality and integrity of collateral asset estimating team, work on preparedness of loan officers and managers in processing Micro Finance Institution and none Micro Finance Institution loan products, dedicating sufficient IT infrastructure and MIS software application, human and financial resources to the transformation process. The company needs to utilize the support from the government in the way it creates more opportunity with regard to saving mobilization, facility upgrading and also has to enhance its accessibility to farmers with more service quality that could be the competitive advantage in the future.