Impact of Credit Risk Management on Customer Retention, Non Performing Loan and Financial Performance: A Study on IDLC Finance PLC”

Abstract

The report is based on the “Impact of Credit Risk Management on Customer Retention, Non-Performing Loan and Financial Performance: A study at IDLC Finance Limited”. The major objective of the report is to know the activities of credit risk management of IDLC Finance Limited due to ensuring customer retention. Focusing on the non performing loan and financial performance is another objective of the report. The loan sanctioning procedure and pricing strategy are also objectives of the report. Due to preparing the report both qualitative and quantitative methods have been used in the report. Most of the information of the report has been collected from primary sources and also some information has been collected from secondary sources. All branches of IDLC Finance are the population and head office of IDLC Finance has been selected as sample of the report. Due to completing the report judgment sampling is used. Customer retention strategy and how credit risk management department influences to reduce non performing loan are also used in the report. Credit risk management department of IDLC Finance does not focus on risk based financing rather focus on collateral based financing. Due to ensuring customer satisfaction, turnaround time of loan sanction has been reduced and repayment histories of the clients are noticed more compared to cash flow of clients. Most of the non performing loan creates because of the influences of reference groups, and political parties but the effect of these groups are zero at IDLC Finance that are the main reasons for being the non-performing loan only 2.77 percent in 2017. Credit risk management department are now focusing on SME division to create new entrepreneur and the growth is almost 16.84 percent. Influences of macro and microeconomic factors are always analyzed by the credit risk management department to get information on cash flow and financial performance of clients. Growth of return and equity of IDLC Finance is decreased in 2017 because the