The Role of the Account Officer in the Microfinance Loan Process

The MFIs first contact with

the prospective client/borrower/applicant is through the Account Officer during the Loan Application interview.

The MFI relies on the

recommendation of the Account Officer for decisions on approval or rejection of a loan application

An Account Officer can only be effective

in his/her job if s/he clearly understands his/her role in the Microfinance Loan Process, specially in relation to Client Selection and Loan Portfolio Management (monitoring and collection)

By the end of this lesson, the Account Officer will be able to:

1. Determine if s/he has the qualities that will make her/him an effective Account Officer;

By the end of this lesson, the Account Officer will be able to:
2.

Understand the specific skills required in each of the steps in the Microfinance Loan process

By the end of this lesson, the Account Officer will be able to:
3.

Conduct Client Selection with the effective use of CIBI tools to be able to make the recommendation to the bank with respect to the microfinance loan application.

Several steps are undertaken before a microfinance loan is approved. In this entire process, it is the proper conduct of Client Selection that spells success or disaster for the MFI.

The Microfinance Loan Process

1) Client Orientation & Application

2) Client Selection (CIBI)

3) Loan Approval

6) Loan Collection/ Monitoring

5) Loan Release

4) Loan Processing

Prospective applicants are brief on the MFIs policies and procedures for its microfinance loan product

1) Client Orientation & Application

 Account

Officer interviews the applicant and gathers basic information for the loan application form; the AO fills up the form for the applicant.

1) Client Orientation & Application

Account Officer does initial assessment to see if applicant meets the MFIs client eligibility criteria

1) Client Orientation & Application

Account Officer conducts the CIBI

2) Client Selection (CIBI)

Account Officer does the Character Analysis to establish if the applicant deserves a loan

2) Client Selection (CIBI)

Account Officer does the Repayment Capacity Analysis to determine how much loan the bank can give the applicant without compromising ability to pay

Account Officer only does the Repayment Capacity Analysis if the applicant passes the Character Analysis

3) Loan Approval

The Account Officer finalizes the CIBI Report and makes his/her recommendation on the loan application

3) Loan Approval

The Account Officer submits the CIBI Report to the MFU Supervisor for review

 The
3) Loan Approval

MFU Supervisor reviews the report and endorses the same to the branch Credit Committee for final review and approval.

4) Loan Processing

Upon approval by the CreCom, the loan documents are returned to the MFU for preparation of loan documentation prior to loan release

 Once

5) Loan Release

loan documentation has been completed, the MF Supervisor advises the Cash Department of the loan approval and requests for schedule of loan release

 The

5) Loan Release

Account Officer advises the applicant of his/her schedule for loan release; advises the applicant to bring spouse and co-makers to sign loan documents during the loan release

6) Loan Collection/ Monitoring

The Account Officer is responsible for the loan s/he recommended for approval

 The

6) Loan Collection/ Monitoring

Account Officer monitors the borrowers business to ensure that loan repayment will not be a problem (changes in business condition should evaluated)

6) Loan Collection/ Monitoring

Depending on the MFIs policy, Account Officers may do collection of loan amortizations when they fall due.

Of the six steps in the process, the most crucial are Steps 1 (Client Orientation & Application), 2 (Client Selection) and 6 (Loan Monitoring/Collection - also known as Loan Portfolio Management)

The Account Officer is the person responsible for the effective implementation of Steps 2 and 6

Qualities of an Effective Account Officer

Strong moral character Keen observer

Ability to express findings in a brief written report

Good retention ability

Resourceful & perceptive

Analytical mind Good conversationalist

Objective & consistent

Exhausts all means to gather information

Has initiative to provide feedback about client & competition

Strong sense of of Responsibility

Not influenced by favorseeking individuals/parties

A specific type of

personality makes for an effective Account Officer.

Account Officers can

acquire the needed technical skills by undergoing the Account Officers Course