European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.10, No.30, 2018 197 Delinquency Management in Private Commercial Banks: The Case of Bangladesh Md. Ataur Rahman (Corresponding author) Assistant Professor, Department of Finance and Banking Begum Rokeya University, Rangpur, Bangladesh Email: ataur@brur.ac.bd Md. Sadrul Islam Sarker Assistant Professor, Department of Management Studies Begum Rokeya University, Rangpur, Bangladesh Email: sadrul@brur.ac.bd Abstract This study examines delinquency management practices, causes of delinquency, and find out the ways of improving loan delinquency in private commercial banks in the context of Bangladesh. A sample of 250 primary observations has been collected through a self-administered questionnaire using a simple random sampling method from the target population during 2017-2018. The target population includes credit and recovery officers, individual and institutional borrowers from 30 private commercial banks in Bangladesh. To analyze the findings, the descriptive statistics of the variables are used and the results are presented in the frequency tables. This paper exposes that, loan client assessment, collateralized lending, sending reminder messages to the borrowers, credit monitoring, setting realistic terms of credit, and insurance of loans are the delinquency management practices in private commercial banks. This research also reveals that improper selection of a loan client, lack of follow up, unhealthy competition among banks, lack of proper analysis of project viability, higher interest rate, under financing/over financing, poor economic conditions, and information asymmetry are main causes of loan delinquency. This study also discloses that, strict adherence to credit policy, visiting client after loan disbursement, proper valuation of security, regular/timely release of funds, training and advice given to loan clients, loan given to business not against collateral, post loan services, fixation of lower interest rates, and proper documentation before disbursement can be main strategies of improving loan delinquency in private commercial banks. The findings of this research would help private commercial banks to reduce non-performing loans and improve delinquency management. Key Words: Delinquency management, non-performing loans, commercial banks, Bangladesh 1. Introduction Any account in which the payment due has passed and the required payment has not been paid is called loan delinquency. Therefore, loan delinquency refers to those as financial assets from which banks no longer receive interest or installment payments as scheduled (Schoenmaker, 2012). Delinquency management is the support, control systems, procedures, policies, principles and practices necessary to manage the outstanding loans and advances repayment and to monitor business risks properly. Delinquency management involves credit risk assessment, loan documentation, loan monitoring, and supervision and delinquency management controls. Delinquent loans play a critical role in commercial banks expenses, cash flows, revenue and profitability (Ahmed, 2015). The most dominant factors in the failure of private commercial banks have been the poor quality of assets and inadequate delinquency management. The economic development of a nation and the stability of the banking system are invariably interrelated. International experience shows that if delinquencies are not managed properly, it will lead to banking failures and nationwide financial vulnerability. Delinquency management is thus essential to ensure a sound financial system and possibly provides an early alarm to regulatory authorities of the banking system (Prasanna et al., 2014). Bonin and Huang (2001) also stated that the possibility of banking crises increases if loan delinquency is not managed properly. Well functioning commercial banks accelerate economic growth, while poorly functioning commercial banks are an impediment to economic progress and aggravate poverty (Richard, 2011).