Credit Management training seminar power point presentation

Credit management training seminar presentation

1. CREDIT MANAGEMENT MAY 26, 2023 COOPERATIVE DEVELOPMENT AUTHORITY ELENA PINEDA – DELA CRUZ Certified Public Accountant

2. WHAT IS CREDIT MANAGEMENT? Refers to the process of overseeing and controlling the credit policies and practices of a business or institution. It involves the strategic management of credit risk, which is potential for financial loss due to a borrower’s failure to repay a loan or fulfill other credit obligation. It encompasses various activities and strategies to ensure the efficient and effective utilization of credit.

3. THE NATURE OF THE CREDIT AND SAVING COOPERATIVE Cooperatives are member-owned and member-controlled organizations, thus, thru savings and credit, cooperative members can utilize and tap the potential of these wealth-generating activities. However, unlike other business organizations, cooperative has sets of principles which must be adhered to. CONCEPT AND PRINCIPLES OF SAVINGS AND CREDIT

4. Cooperative encourages its members to save money and enables them to obtain loans they may require for various purposes from their accumulated savings. Savings, when utilize generate wealth. Cooperative encourages its members to obtain credit and enables them to generate more products and services thus accumulating wealth for themselves and which helps run the economy of the country. THE SAVING ASPECT THE CREDIT ASPECT CONCEPT AND PRINCIPLES OF SAVINGS AND CREDIT

5. Anyone who meets the criteria for membership can benefit from the cooperative’s savings and credit services. Members can exercise the right to participate in cooperative affairs, including savings and credit policies, thru one-member, one-vote system . OPEN MEMBERSHIP DEMOCRATIC CONTROL CONCEPT AND PRINCIPLES OF SAVINGS AND CREDIT

6. Member’s active participation thru pooling of savings and in turn have access to credit facilities based on their need. C ooperative governs and acts independently. Policies can be formulated, revised, and or amend to cater to the needs of its members. These policies then are executed and governs the credit activities of the coops. Member’s Economic Participation Autonomy and Independence CONCEPT AND PRINCIPLES OF SAVINGS AND CREDIT

7. By promoting financial literacy, cooperatives empowers members on savings, credit and other related topics. Shared knowledge and support amongst the cooperative effectively progress the good credit and lending practice in the industry. Education, Training and Information Cooperation among Cooperatives CONCEPT AND PRINCIPLES OF SAVINGS AND CREDIT

8. C ooperatives generate wealth thru savings and credit, the general public are not only benefited directly thru CDF but also as the member’s needs are being met, communities can become healthier. Concern for the Community CONCEPT AND PRINCIPLES OF SAVINGS AND CREDIT

9. Key Elements of Credit / Lending Policy The OBJECTIVE Stated objective outline the goals and may include financial inclusion, managing risk, supporting the economic growth, and meeting the needs of the general membership.

10. Key Elements of Credit / Lending Policy Risk Management Focus on managing risk. The determination of the level of risk the cooperative is willing to accept, establishing strategies to mitigate and control risk to acceptable level.

11. Key Elements of Credit / Lending Policy Loan Types and Eligibility The policy should define the types of loans and credit products being offered. Eligibility of borrowers should be outline, includes the basic info requirements as to age, employment status, income, credit history. It also specifies loan terms, interest rates, credit limit, repayment periods and other applicable information.

12. Key Elements of Credit / Lending Policy Loan Approval Process Details the procedures and criteria for evaluating loan applications. The required documents, the process of verifying information, and the roles and responsibilities of those involved in the process.

13. Key Elements of Credit / Lending Policy Collateral and Security The policy defines the types of acceptable collaterals to provide security to the loans. It specify the valuation method, documentation requirements, and procedures. It should also establish the loan – to – value – ratios.

14. Key Elements of Credit / Lending Policy Interest Rates and Fees The policy addresses the method of pricing of loans and credit products. Factors such as credit risk, market conditions, operating expenses are all considered when applying rates and fees.

15. Key Elements of Credit / Lending Policy Loan Monitoring and Collections Provisions for monitoring and managing loans, from disbursement (release) to collecting payments to defaults. Guidelines should be establish for early warning system, loan restructuring, collection processes, and when the necessary, the use of external collecting agencies.

16. Key Elements of Credit / Lending Policy Compliance and Regulatory Requirements The policy should include compliance to applicable laws, regulations and industry standard. It should outline the procedures in adhering with AMLA, consumer protection laws, privacy regulations and other pertinent laws.

17. Key Elements of Credit / Lending Policy Review and Revision Provisions for regular review and revision to adapt to changing market conditions, regulatory requirements and internal strategies (challenges). This ensures that the lending and credit policies remain relevant, effective and aligned with the cooperative’s objectives.

18. Effective Credit/Lending Process Application and Documentation Only complete, current and correct required documents should be accepted. Guide the client-member on accomplishing needed forms. Having a readily list of requirements will be less time consuming for both parties. Avoid confusion and delays.

19. Effective Credit/Lending Process Credit Evaluation and Underwriting This involves assessing the credit-worthiness of borrowers. The financial stability, status of employment, income, credit history and debt obligation are crucial information in deciding whether to extend credit or not.

20. Effective Credit/Lending Process Loan Approval Approve loans only if credit evaluation was completed. Determine levels of approving authority. Formulate controls to be complied by the credit committee, loan officers, managers and the BOD.

21. Effective Credit/Lending Process Loan Terms and Condition Once loan is approved, terms and condition must be clearly understood by the borrower. This is to prevent confusion that might result to borrower’s default and unnecessary penalties.

22. Effective Credit/Lending Process Loan Disbursement Before releasing loan, review the completeness of supporting documents attached to disbursement vouchers. Documents should be properly signed, voucher certified and approved. Check should be named to the borrower.

23. Effective Credit/Lending Process Loan System Monitoring Once the loan is released, monitor the adherence to policy on credit collection. Procedure should be put in place and payment behavior should be documented in individual files of borrowers.

24. Effective Credit/Lending Process Default Management T here must be a proactive communication with the borrower in default. Establish realistic repayment plans. Recover outstanding balance thru appropriate actions.

25. Effective Credit/Lending Process Regular Review and Evaluation Continuous review and evaluation can identify areas of improvements that can prevent future losses. Document and analyze data, loan performance, rates, customer feedback and industry trends.

26. Effective Credit/Lending Process Compliance and Risk Management Stay updated to regulatory requirements, data privacy regulations, anti-money laundering guidelines and consumer protection laws. Strong risk management should be place to identify, assess and mitigate credit risks associated with the lending activities.

27. Monthly and accurate reporting of delinquent loan to the board; Timely and consistent follow-up actions; Utilization of outside collection sources when internal efforts fail to produce results; and Maintenance of collection records. A B C D REMINDERS

28. That’s it! Thank you!