The main aim of this study was to examine the relationship between credit management policy and financial profitability of Microfinance Institutions in Uganda, a case study of PML, Katwe Branch. With the objectives of the study which included; establishing the effect of credit monitoring policy on financial profitability; determining the relationship between credit recovery policy and financial profitability; and assessing the relationship between lending policy and financial profitability of PML. The study adopted both descriptive and cross-sectional survey research designs with both qualitative and quantitative methods of Data collection carried out at PML Katwe Branch. The study population was 330 from which 71.8% was randomly and purposively selected as the study sample. Questionnaires and interviews were used as Data collection methods. The results of the study revealed a very strong positive and significant correlation between credit monitoring policy and financial profitability, a moderate significant relationship between loan recovery policy and financial profitability, and a moderate positive significant relationship between lending policy and financial profitability. In conclusion, the findings of the study indicated that credit monitoring policy, loan recovery policy, and lending policy are influential factors of financial profitability in PML. The study recommends that; microfinance institutions need to have effective supervision of borrowers on credit utilization and repayment which should be done frequently to ensure financial profitability; and the study recommends that; management of PML and Microfinance Institutions should consider revising and re-establishing procedures of collecting credits from clients for the cost effectiveness of the Institutions. This can be done by using alternative and cheaper sources of debt collection procedures. Thus, there is a need to develop effective loan repayment system. Microfinance Institutions’ committee members and staffs are recommended to visits borrower’s business premises and verify borrower’s assets before issuing out credit of any form to them.