Turning around licking the par problem experience of the rural bank of digos inc
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Turning Around: Licking the PAR Problem Experience of the Rural Bank of Digos , Inc. Gionvanni D. Gabriento Manager , Human Resource & Administration. 2009 RBAP-MABS National Roundtable Conference May 12-13, 2009 Hyatt Hotel and Casino Manila. RURAL BANK OF DIGOS.

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Turning Around: Licking the PAR Problem Experience of the Rural Bank of Digos , Inc.

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Turning around licking the par problem experience of the rural bank of digos inc

Turning Around: Licking the PAR ProblemExperience of the Rural Bank of Digos, Inc.

Gionvanni D. Gabriento

Manager, Human Resource & Administration

2009 RBAP-MABS National Roundtable Conference

May 12-13, 2009

Hyatt Hotel and Casino

Manila


Rural bank of digos

RURAL BANK OF DIGOS

  • The bank opened and started operating on February 17, 1956

  • The bank is the PIONEER BANK in Digos, Davao del Sur

  • In the 80’s the bank was hounded by:

    • Problems in the sugar and coconut industries

    • Failure of Masagana 99

    • Peso Devaluation

    • Bad economy


Rural bank of digos1

RURAL BANK OF DIGOS

The bank turned a new leaf in the 90’s:

New Management- Increased capitalization, computerization, opened 3 branches

Business partnerships with Bangko Sentral ng Pilipinas, Land Bank of the Philippines, Coconut Industry Investment Fund Finance Corporation

Entry of the Microenterprise Access to Banking Services in Mindanao (MABS-M)


Rural bank of digos2

RURAL BANK OF DIGOS

In the horizon is a brighter 2000’s:

Head Office & component departments had been created

Professionalization of the Human Resources and Administrative Department

Infusion of additional capital

Opened 2 more branches

Received the Regional and National Award from Land Bank of the Philippines


Microfinance background

MICROFINANCE BACKGROUND

HOW AND WHEN MICROFINANCE STARTED:

  • The bank was one of the pilot banks of the MABS Program

  • MABS trained the bank in microfinance in 1998

    • Main Branch, Digos, Davao del Sur

    • One loan product for microentrepreneurs

    • Four Field Staff, each with a target of 120 accounts

    • Zero PAR in the first 3 years of operation


Microfinance background1

MICROFINANCE BACKGROUND

Microfinance Products:

Negosyo Palambuon Pundo Padaghanon (NPPP)

  • a short term loan to assist microenterprise operators to expand their business

  • operations and accumulate their own capital that will, in due time, make them

  • less dependent on borrowed funds. It focuses more on microenterprises that

  • generate regular daily sales and on microenterprise operators who currently

  • depend on loans from informal moneylenders for working capital.

KAABAG SA MAG-UUMA(KASAMA)

  • a short term loan that caters to small farmers with household agricultural

  • activities and sources of income other than the farm , for the purpose of

  • helping them with their financial requirements. A market driven product which

  • identifies and meets clients needs based on character and cash flow.


Microfinance background2

MICROFINANCE BACKGROUND

Support from MABS:

  • Countless trainings and seminars

  • Transportation equipment – motorcycles

  • Office equipment – computers, printers

  • Branch visit and technical assistance

  • Regular product Evaluation


Problems encountered after several years

PROBLEMS ENCOUNTERED AFTER SEVERAL YEARS

  • Clients immediate change of address / relocation - cannot be located

  • Complacency and lack of supervision of Account Officers

    • Haphazard CI / BI and loan evaluation

    • Relaxed collection efforts (tolerance of delinquent clients)

  • Lack of follow-up training for Account Officers and Supervisors

  • Multiple borrowings of clients (from other lending institutions)


  • Remedial measures

    REMEDIAL MEASURES

    • Tutok, Dikit, Kulit Strategy

      • Rigid follow up of delinquent clients

      • Demand letters

    • Follow up and collect from loan Co-Makers

    • Filing complaints against delinquent clients in the Barangay Court

    • Seizure of personal/business assets of delinquent client

    • Regular evaluation of MF Supervisor, validation thru area visits


    Remedial measures1

    REMEDIAL MEASURES

    • Re-training of Account Officers and other bank staff

      • Make sure loans are properly evaluated

      • Client validation visit

      • Regular monitoring of AO performance

  • Year-end branch and staff incentive based on:

    • Number of Active Borrowers and Loan Portfolio

    • Level of Portfolio at Risk


  • Microfinance performance

    MICROFINANCE PERFORMANCE

    5-YEAR PORTFOLIO AT RISK


    Microfinance performance1

    MICROFINANCE PERFORMANCE


    Lessons from experience

    LESSONS FROM EXPERIENCE

    • Hawklike staff performance monitoring is key to success in microfinance

    • Preparing and training the staff in the basics of microfinance lending is of utmost importance

    • Prudent conduct of CI/BI and Cash flow evaluation = quality loan portfolio

    • Intensified collection efforts (no room to relax) = disciplined clients


    Lessons from experience1

    LESSONS FROM EXPERIENCE

    • Patience is a virtue in dealing with both AOs and clients

    • A good relationship with clients encourages loyalty

    • Give to Caesar what is due to Caesar – branch incentive program works!


    Plans for the future moving forward

    PLANS FOR THE FUTURE(Moving Forward)

    • Development of new loan and deposit products

    • Market Penetration/ Expansion

    • Updating of existing product manuals

    • Continuing training and seminars for bank officers and support staff

    • Opening of new branches


    End of presentation

    END OF PRESENTATION


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