CREDIT RISK MANAGEMENT PRACTICES IN SAVINGS AND CREDIT COOPERATIVE SOCIETIES (SACCOS) OFFERING FRONT OFFICE SERVICE ACTIVITY (FOSA) IN KENYA

The main objective of the study was to examine Credit risk management practices in Saccos with Front Office Service Activity in Kenya. Similar studies have been carried out in developed countries (liukisila, 19%) that have confirmed that the problem of risk management often begun right at the loan application stage and increased further at the loan approval, monitoring and controlling stages, especially when credit risk management guidelines in terms of policy/procedures did not exist or were weak or incomplete, Brownbridgc (1998) observed that these problems are at their acute stage in developing countries. \n\nThe research design of the study was based on a descriptive survey. The sample of the study consisted of credit managers and managers employed in the 40 SACCOs offering FOSA services within Nairobi Province. The data was collected using self administered questionnaires by the researcher, coded and Statistical Package for Social Science Version 17 was used to analyze. The results were presented using table. The research found out that loan portfolio management, risk identification, risk analysis and assessment as well as risk monitoring were instrumental in credit risk management process. Saccos should fully embrace credit risk management as way to reducing credit defaults. \n\nIn particular, the management should consider implementing a frame approach to risk identification; ensure that their Saccos, regardless of size, have an effective system of internal controls that is consistent with the nature, complexity, and risk inherent activities and that its corresponds to the Sacco environment and conditions; management of Saccos should ensure that there is an ongoing evaluation and assessment of the credit related risks. In addition it should also ensure monitoring process should provide assurance that there are appropriate controls in place for the organization's activities and that the procedures arc understood and followed finally on credit risk management practices Saccos should overcome challenges by ensuring the members are continuously educated and provide resources such as qualified personnel and proper software to ensure consistency, transparency and accountability are achieved.