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Loan Documentation Procedure

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Loan Documents Checklist

• Loan Application

• CI/BI Report

• Co-Signer’s Profile

• Loan Recommendation Sheet

• Promissory Note

• Discount Statement

• Loan Amortization Schedule • Deed of Assignment of Deposit

• Security Agreement/Kasabutan

• Credit Memo for Savings Account or Cashier’s Check

• Signature Cards for Opening of Savings Account

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Loan Application

• Basis for determining whether the applicant meets the basic eligibility criteria of the ABC Loan

• Given to the client after the client orientation session and

submitted to the AO after completion

• Should be properly filled out • Signed by borrower and the co-borrower

• Can be handwritten. But if handwriting is not legible, should be typewritten

• With client’s picture ID and any other requirements

• AO should assist Clients who need help in completing the application if required.

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Credit Investigation Report

• Basis for determining the client’s character and capacity to pay

• Contains information about the client’s personal circumstances, assets, credit history, savings, details of his/her business, cash flow analysis, results of character checking, and the AO’s own assessment and recommendations on the loan application

• Prepared and signed by the AO

• Reviewed by the MFU Supervisor

• AO is responsible for verifying all information supplied in the CI report. Any false information deliberately supplied by the AO will be a cause for disciplinary action.

• Can be handwritten

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Co-Maker’s Profile

• Prepared by the AO by interviewing the co-signer

• Signed by the co-signer after the interview

• Used to determine the eligibility of the person as co-signer

• Contains information about the co-signer’s personal circumstances, details of his/her occupation and income, relationship to the client, and his/her willingness to act as co-signer.

• Before the interview, AO should clearly explain to the person the responsibilities of a co-signer and the strict policy of the bank with regard to loan collection

• Can be handwritten

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Loan Recommendation Sheet

• Prepared by the AO

• Submitted to the Credit Committee along with the loan application and CI report

• Contains the highlights of the CI report

• Indicates the decision taken by the Credit Committee with regards to the loan application

• Can be handwritten

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Promissory Note

• Serves as the main loan document or evidence that the client has taken out a loan from the bank and agrees to the terms and conditions of the loan

• Indicates the date of PN, name of borrower, amount of loan, maturity date, interest rate and penalty charges, and other conditions of the loan

• Loan amortization schedule is attached to the PN

• Signed by the borrower(s), co-signer(s) at the bank immediately before loan release

• Also signed by the AO and MFU Supervisor as witnesses

• Prepare required number of copies (2 )

• Should be checked by the MFU Supervisor to make sure that the completed PN is in order

• Should be typewritten

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Disclosure Statement

• Shows amount of financial and non-financial charges to be deducted from the loan, and the net proceeds of the loan

• Also proves that the net proceeds have been received by the borrower

• Prepared necessary copies – the original copy of which is given to the borrower and copy/ies kept for file

• Checked by the bank accountant

• Signed by the borrower immediately after the proceeds of the loan are disbursed (through deposit or CC)

• Should be typewritten

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Security Agreement

• Provides additional guarantee (aside from co-signer’s guarantee) for the loan from the borrower

• Indicates the type of assets owned and offered by the borrower to secure his/her loan, and the borrower’s consent to turn these assets over and allow them to be sold by the bank if s/he fails to comply with his/her obligation

• Prepared by the AO

• Signed by the borrower and spouse before loan disbursement

• Also signed by the AO and MFU supervisor as witnesses

• Can be handwritten

Any Question?