The study focused on the Appraisal and credit risk management practices of Development Bankrnof Ethiopia, against the background that there was large amount of nonperforming loans beyondrnthe set threshold of NBE, which could affect the overall status of the bank and the country as arnwhole. Based on the general objective of assessing the loan appraisal and credit riskrnmanagement practices of Development Bank of Ethiopia, this study also tries to investigate thernreasons for the accumulation of bad loan at DBE. A descriptive survey method was used for thernstudy, by involving 32 questioner respondents comprising of all the technical staff fromrnDevelopment Bank of Ethiopia with a direct credit related functions and key informant interviewrnwere also held with the credit approval team chairman of DBE. A descriptive analysis was usedrnto investigate about the loan appraisal, the loan buyout, risk transfer, risk diversification, riskrnretention and loan approval practices of DBE. The results of the study showed as there existed arnvery good loan appraisal process at Development Bank of Ethiopia as compared to other riskrnmanagement technique like risk transfer and risk retention. The appraisal process helps identifyrnand analyze loss exposures support to monitor risk which enhances normal loan repaymentrnbehavior of any creditor. Generally, except the issue of diversification in which the respondentsrnresponse shows a positive result, DBEâ€™s credit risk management practice, in area of risk transferrnand retention is weak, hence these weak credit risk management practice of the bank in line withrnthe loan buy out services and implementation drawbacks were responsible for the accumulationrnof Nonperforming loans in the bank