rural bank of cantilan, inc. microfinance experience note: this is a sample presentation template...

RURAL BANK OF CANTILAN, INC.

MICROFINANCE EXPERIENCEMICROFINANCE EXPERIENCE

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OUTLINE OF PRESENTATION

The Municipality of Cantilan Rural Bank of Cantilan (RBC) Institutional

Profile RBC’s Microfinance Experience Features of RBC’s Microfinance Product Policies and Procedures Product Performance Problems Encountered/Lessons Learned

The Municipality of

Cantilan

Total number of barangays: Total population, 2000: Total # of households, 2000 Primary sources of income:

The Municipality of Cantilan

(Location of CHQ & Main Branch)

1 Rural Bank (RB Cantilan) Active credit cooperatives: Pawnshops & lending investors: Number of registered business

establishments as of ____:

BANK PROFILE

Established in 1980 Has 5 branches including main

office Total resources (Aug 02) PhP Total loan portfolio PhP Has 144 employees of which

____ is composed of MF staff

RBC Organizational Chart

Board of Directors

General Manager

Accountant Cashier Loans Officer

Bookkeepers

Tellers/ Solicitor

s

Account Officers

Regular Loans

MF Supervisor

Account Officers

Microfinance

BANK’S PRODUCTS

Deposits Regular Savings Student’s Savers Time (Savings Deposit Plus; Double

Your Money) Loans Agricultural (secured loans) Commercial (including MF products) Other Loans (Salary; Bgy

Honorarium; Pensioners’ Loan)

RBC’s Microfinance Product

K I T A(Kitâ Insakto, Tipon

Asenso)

KitKitââ Insakto, Tipon Asenso Insakto, Tipon Asenso ( K I T A )( K I T A )

PRODUCT FEATURES

Intended for microentrepreneurs Loan sizes of P2,000.00 up to P25,000.00 for

first time borrowers Maximum loan up to P80,000 3% monthly interest amortized equally P200 service fee deducted up front; beyond

P30K, 1% SC Loan term : 1 mo. – 6 mos. Mode of payment : Weekly Pick up service for loan payments & deposit


Borrower Eligibility Criteria

Individual, male or female, 18-65 years old, in good health

Engaged in present business for at least one (1) year.

Residing in present address for at least two (2) years.


Borrower Eligibility Criteria

Residence must be within the bank’s service area.

Business is located within a defined geographical area coverage of KITâ loan product.

Without any history of past due loam with Rural Bank of Cantilan or with any creditor or supplier.


Loan Size, Terms and FeesLoan

NumberAmount Term Interest rate Service

ChargePenalty

First 2,000-25,000 1-3 mos. 3%/month 200 2%/day

Second 2,000-30,000 1-4 mos. 3%/month 200 2%/day

Third 2,000-35,000 1-5 mos. 3%/month 200 2%/day

Fourth 2,000-40,000 1-6 mos. 3%/month 200 2%/day

Fifth 2,000-45,000 1-6 mos. 3%/month 200 2%/day

Succeding Loans

2,000-50,000 1-6 mos. 3%/month 200 2%/day

KitKitââ Insakto, Tipon Asenso Insakto, Tipon Asenso ( K I T A ) ( K I T A )

PRODUCT FEATURES

Loan Security : P2,000.00 – P10,000.00 ; two co-makers only

P10,001.00 – P20,000.00 ; two co-makers plus Security Agreement, Deed of Assignment of Deposits

Above P20,000.00 - REM or Chattel Mortgage Deposit Build up:

Initial deposit at least P100 Regular deposits to go with each loan payment


Loan Collateral

Some form of collateral/guarantee may be required on allall loans

The value of the collateral will not be a determining factor in deciding how much a client can borrow.

Collateral should not be relied on as a means of recovery


Repayment Capacity An assessment of now much a person or a

business can borrow and easily pay over a particular time.

Determined by looking at the net income of the business and the net income of the household on a daily, weekly and monthly basis.

It is recommended that the initial maximum adjusted repayment capacity should not exceed 25% for first-time clients.


Loan Amortization Schedule

Frequency of payments depends on the income flow of the borrower.

Equal payments either daily or weekly. Daily amortization is paid from Monday

to Friday. Weekly amortization is paid every 7

days from the anniversary day.


Payment Schedule Loan with DAILY payments: First installment

starts the day after loan release. When a loan release falls on a Friday, the first installment shall be due Monday of the following week. Daily payments ate directly credited each day to the client’s account.

Loan with WEEKLY payments: First installment shall be due on the 7th day starting from the day after releasing the loan. For example, when a loan is released on a Monday, weekly payment is due every Monday thereafter.


Restructuring

Restructuring should only be allowed for clients who “can’t pay”.

Restructuring should only be allowed once for each client. Terms of the restructured loan must not exceed 6 months.

Restructuring of loans should be discouraged and must be governed by strict rules


Prepayment

Only good clients who have paid at least 85% of the amortizations due and would need a repeat loan to meet a good business opportunity are allowed to fully repay their loans before the maturity date.


Savings Component

Bank ultimate goal – to help clients achieve financial stability as a result of good savings habit.

All loan clients are required to maintain deposit accounts. The minimum amount to open is P100. Clients determine how much they will deposit weekly, but minimum is

P30

Loan Delinquency Management

ALARM SIGNALS IN MANAGING DELINQUENT PAYORS


Alarm Signal No. 1:Alarm Signal No. 1:Payment is Delayed One (1) DayPayment is Delayed One (1) Day

AO visits the client within 24 hours.AO determines the reason for non-payment.AO encourage the client to pay immediately so as to avoid falling behind in their payments.


Alarm Signal No. 2:Alarm Signal No. 2:Payment is Delayed Three (3) DaysPayment is Delayed Three (3) Days

AO warns client of adverse consequences of non-payment (penalty charges, negative credit ratings). AO informs co-borrower and co-makers.AO reports result of visit to MFU Supervisor


Alarm Signal No. 3:Alarm Signal No. 3:Payment is Delayed One (3) WeekPayment is Delayed One (3) Week

Sent first warning letterMFU Supervisor visits borrowerIf the client is unable to pay, the MFU Supervisor should visit the co-borrower and co-maker to collect.MFU Supervisor reports result of visit to the Branch Manager.


Alarm Signal No. 4:Alarm Signal No. 4:Payment is Delayed Two (2) WeeksPayment is Delayed Two (2) Weeks

Branch Manager visits borrower, co-borrower and co-makers.Branch Manager informs the clients of more drastic measure like notifying the barangay captain.Branch Manager warns the client of becoming blacklisted borrower.


Alarm Signal No. 5:Alarm Signal No. 5:Payment is Delayed Three (3) WeeksPayment is Delayed Three (3) Weeks

Third and final warning letter sent.Notify the barangay captain.Finalize the “Dacion en Pago” or chattel mortgage.Ask the client to come to the bank immediately to avoid legal action.


Alarm Signal No. 6:Alarm Signal No. 6:Payment is Delayed Four (4) WeeksPayment is Delayed Four (4) Weeks

AO, MFU Supervisor, and the Branch Manager should now arrange to get the security item or chattel.Clients will not be able to borrow from the bank again.

K I T A Lending Process and Procedures

Microfinance Loan Flow Chart

Client Orientation

and Pre-application Loan

Release Disburse

ment

Loan Applicati

on

Loan Review

and Approva

l

Credit and

Background

Investigation

Loan Repaym

ent

Client OrientationApplicants come to the bank for the

client orientation

Attendance

sheet

Welcome and introduction

of prospective

clientsOrientation proper

Question and Answer

Client Logbook

Pre-Application ProcedureClient comes to bank

AO interviews client to

determine eligibility

Orientation for

eligible clients

Clients complete the

pre-application

form

AO conduct

s the CI/BI

Credit and Background Investigation

AO conducts initial interview

If initial interview is positive, AO visits two reference suppliers or

creditors, or one of each

AO visits two co-makers, two to three residential neighbors and barangay captain/purok leader

or market administrator

AO verifies client for court cases or

warrant of arrest

AO follows up the credit references given by the

prospective client

If CI/BI is positive, AO prepares the loan application form

Loan Application

AO goes back to the client together with the application form

and tells the cash flow result.

If interested, the applicant and his/her spouse should sign

the application form.

MFU Supervisor checks the cash

flow information and completeness

of needed documents.

If additional information is needed, the supervisor ask the AO to gather the information.

Applications ready for submission to the mini

CRECOM are summarized by each AO in a form.

Preparation before the Credit Committee Meeting

AO summarizes and prepares the loan recommendation sheet

AO organizes the applicant’s Credit Folder

Supervisor reviews applicant’s Credit Folder

Loan application is endorsed to the Credit Committee

• Loan Recommendation Sheet• Loan Application Form• Completed CI/BI Form• Co-maker’s Profile• Proof of Payments and other documents

Check and reviews for inconsistencies

Loan Review and Approval (Credit

Committee Meeting)

Credit Committee• meets once a week to review and approve loans• composed of General Manager, Tandag Branch Manager and MFU Supervisor

Preparation

Supervisor presents CI/BI result to Credit

Committee

Discussion

Recommendation and Approval

Loan Release Disbursement

Manager Reviews and signs Application form, Disclosure Statement and Cashier’s Check

Teller disburses loans, encashes CC and gives

client the Loan Disclosure and Discount Statement, and schedule

of payment

Cashier checks deductions and net proceeds, signs

Cashier’s Check and forwards security folder to

the Loans Teller

Cashier approves loan release, generates

schedule of payments for AO, Teller and

Client

Teller forwards loan security folder to New

Accounts Clerk who then forwards the check to the

bookkeeper

New Accounts Clerk forwards security folder to

the Supervisor

AO prepares summary of releases for the day

Supervisor encodes Client Identification (CID),

executes first stage release and tagging

Client receives cash from Teller, signs receipt for amount received, Teller stamps “PAID” on the

Discount and Disclosure Statement, and CC

Loan Repayment

There are two ways:

Provisional Receipt based repayments through AO or Bank’s Collector (manual system)

Official Receipt repayment through the Teller

Provisional Receipt based Repayments

Bookkeeper generates computer based repayment at the end of the day and updates individual manual ledger on the next

day

AO collects payments from

client, issues PR

In the event of shortages or averages, AO records it in the collection

summary and trace its source. Any excess should be turned over to the

Cashier

Back at the office, AO checks collection against

issued PR, enters collection from each client in Excel

and give a copy of Collection Sheet to Teller

AO forwards cash collected to the Teller for issuance of Official

Receipt

Teller verifies totals per summary and money received, then posts

individual deposit collected and repayment schedule with

provisional receipt.

Cashier makes accounting of

receipts issued by the collector for the day, declares

missing or cancelled receipts

Official Receipt Repayments

Teller should accept repayment and issue Official Receipt not less than the amount of amortization due of the client

In case of over payment and client wants it save, Teller should accept it as deposit.

Teller posts the payment or savings deposit on the computer.

Bookkeeper generates computer based repayment at the end of the day and updates individual manual ledger on the next day

Cashier makes accounting of receipts issued by the collector for the day, declares missing or cancelled receipts

ACCOMPLISHMENTS OF KITA LOAN FOR THE FIRST

3 MONTHS PILOT TEST

PERFORMANCE OF KITA LOAN PROGRAM FOR THE FIRST 3

MONTHS PILOT TEST

SIGNIFICANT THINGS LEARNED FROM THE MABS

PROGRAM

Daghang SalamatDaghang Salamat !

rural bank of cantilan, inc. microfinance experience note: this is a sample presentation template...

Documents

n business

weekly n

n residing

bank profile n

n total population

outline of presentation

good health n

n mode of payment