FACTORS INFLUENCING NON-PERFORMING FINANCING (NPF) FINANCIAL STRATEGIES FROM THE PERSPECTIVE OF BANK COLLECTORS

Abstract

Non-Performing Financing (NPF) is a major threat to the stabilization of Islamic banking institution. From the perspective of debt collectors in the banking sector, this study examines the causes of NPF and the strategies and challenges of recovery for NPF. Adopting a qualitative exploratory approach, interviews were conducted semi-structured with the five experienced officers in charge of the Bank Rakyat Recovery Centre in Kulai, Johor, which were selected through purposive sampling as well as snowball sampling. Key Implications: Thematic analysis identified that weak credit risk assessment, unstable economic structure, and reckless client behaviour combine to drive NPF. Challenges in recovery are regulatory inefficiencies and protracted legal processes. Banks respond with loan restructuring, better credit monitoring, and proactive communications with borrowers. This study demonstrates the importance of robust regulatory frameworks, enhancing the monitoring of credit, and boosting the financial literacy of borrowers. This study also recommends adopting a flexible policy approach and systematic credit risk on NPF recovery in Islamic banking.