The solutions for reducing the ratio of non-performing loan to loan amount under the informal debt recovery project for farmers and households Bank for Agriculture and Agricultural Cooperatives

Abstract

The study on the solutions for reducing the ratio of non-performing loan to loan amount under the informal debt recovery project for farmers and households aims to study factors causing overdue debt and find the solutions for overdue debt. The 3 sets of questionnaire were used as a tool for data collection including   1) questionnaire for 400 customers; 2) questionnaire for 45 branch managers; 3) focus group discussion held among management of Credit for Small Sized Farmers and Informal Debt Recovery Department.

The result revealed that the factors causing overdue debt were due to 4 main reasons including 1) personal factors namely there were multi-debt; 2) external factors which were due to natural disaster; 3)  loan/ the bank’s product namely selection of borrower was done by considering the borrower’s qualification compromisingly; 4) the bank’s officer who lacks follow-up on debt collection continuously. The best solution is to develop standard tool or system for debt follow-up so that the officer can get to know customer information in prompt manner as well as being able to help customer to efficiently find the solution before the non-performing loan occurs, developing debt collection officer to be equipped with debt collection skill and effective negotiation skill, simplifying loan application process to compete with the loan shark business.