ABSTRACT The study was set to establish the impact of credit policy on loan recovery in microfinance institutions in uganda using a case study of pride microfinance Kisoro district branch. The research used a sample size 59 from population of 70 respondents. The research objectives of the study were: To establish the existing credit policies in Pride microfinance Kisoro, to examine how loans are recovered in Pride microfinance Kisoro and to establish the relationship between credit policy and loans recovery of Pride microfinance Kisoro while research questions were: What are the existing credit policies in Pride microfinance Kisoro?, How are loans recovered in Pride microfinance Kisoro? and What is the relationship between credit policy and loan recovery in Pride microfinance Kisoro?. The findings of the study revealed that the branch manager cited that the growing rate of deficit is as a result of inadequate application of the tools of credit policy management thus locking it into an increasing portfolio of non-performing assets. This clearly showed that credit systems were only designed on paper and lacked proper implementation, findings indicated that loan default increased steadily in 2008 to 20 IO (38%-51 %) of nonperforming assets respectively out of (62%-49%) of performing assets, besides weekly deposit are made to avoid the default and further revealed that there is a strong positive relationship between credit policy and loan recovery represented by a correlation of 0.722 implying that the more effo11s put on credit policy, the higher the loan recovery made concluding that the two variables are significantly related. The researcher concluded that credit officers carried out close monitoring and loan management. However, clients' said that credit officers lacked customer care skills; they were arrogant and uncooperative during execution of their duties, clients reported embezzlement of funds by loan officers. And the recommendations included to make clients appreciate the credit policies and recovery procedures. Pride microfinance has to educate the clients and also listen to their grievances, the interest rate should be reduced from 36% per year at least 24% like other lending institutions and the loan amount or size should at least be increased from 700,000-10,000,000 million depending on the financial need and capacity to repay
