Monitoring Process

Credit monitoring by MFB management

Ensuring an accurate bank-wide credit risk management system would require board members and top management to;

1. Formulate policies that reduces risk and establishes clear policies.
2. Establish independent credit review department to monitor and give appropriate report.
3. Periodically review and act where necessary where there are report infractions.
4. Encourage an effective internal control system and program.
5. Maintain a healthy credit portfolio by encourage line managers to achieve set goals.
6. Develop appropriate product and services that resonate with the existing and prospective customers.
7. Present periodic credit report to the board in other to make appropriate decision.

Credit monitoring by MFB staff

1. Conduct proper credit assessment to determine a customer credit worthiness and ability to repay before loan disbursement.
2. Be responsible for loans under their portfolio at all times.
3. Continued follow up after loan disbursement to ensure loan is not diverted.
4. Introduce measure to serve and meet customers demand at all times.
5. Maintain a healthy relationship with customers and be accountable financially.

Client Interview Process

• Confirms the clients identity through an acceptable means of identification recognized by law or any other means applicable
• Probe personal information contained in the application form and other related ones.
• Probe question relating to clients business and other ties to other business in which client is a partner.
• Ask and confirm if client has outstanding loans with other MFBs and if yes, the outstanding loan balance.
• Ask about prepayment and accruals so as to take account of future income and expenses.
• Confirm the loan amount requested with what is written on the loan application form.
• Ask for savings balance with other banks or other informal savings groups.
• Ask for evidence of previous financial transaction (savings or loans) with other financial institutions or informal sector.
• Observe relationship of client to his/her own personal customers and neighbours
• Ask for available form of security/collateral for the loan the client is seeking.
• Confirm if family member is indebted to other microfinance banks

Client Business Interview Process

• Verify the authenticity of clients business and the location.
• Verify ownership of the business to determine if the business is actually owned by the client.
• Verify any form of record keeping including all the books of account.
• Verify consistency and differentials in sales record to determine peak period and low sales day.
• Verify and study the cash flow to determine the business capacity to repay the loan.
• Confirm the level of competition around the business to determine its continued existence.
• Indicate the specific type of business to know its legitimacy.
• Verify receipts ( Prepayments and accruals)
• Confirm ownership of the business premises (owned or rented)