15 January 2019

Tanzania: Risk Management Course Tame Bad Loans

Tanzania Institute of Bankers (TIOB) yesterday launched the Credit Risk Modelling course to help financial institutions make better lending decisions.

The TIOB Executive Director Patrick Mususa said at the launching event in Dar es Salaam over the weekend that the course will help financial institutions to make better lending decisions, improve assessment of credit risk and help financial institutions to know their risk factors.

"We are excited about this new learning initiative because the online school will be cost effective and efficient learning opportunities for professional bankers," Mr Mususa said.

Developed in partnership with US-based Kentara Analytics, the first online course covers Modelling defaults, credit risk data, scoring models and credit ratings, analytics, simulations, capital allocation and risk contributions and risk adjusted performance measures.

Bank of Tanzania's (BoT) Manager, Financial Institution Supervision Department, Nassor Omary, described the course as an enabler of financial institutions in informed decision making.

Representing the Deputy Governor, Financial Stability and Deepening, Mr Omary applauded TIOB for completion of the online learning platform and the kickoff of which he described as 'important course'.

He implored all financial institutions to register and ensure all professionals handling credit related issues have undertaken the course.

Mr Mususa said risks associated with credits and lending have grown over the years, necessitating efforts to bridge the gap and address the default risks that lenders and borrowers are disposed to.

"The significant growth of non-performing loans (NPLs) as banks continue to issue loans is a key example of the risk growth," said the TIOB boss.

NPLs are key factor in the performance of any financial institution that sells credit as one of its business activities.

Increasing NPLs ratio against the total loan book of the financial institution can only be tolerated if it doesn't put at risk the funds available for daily operations.

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