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
•
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 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 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
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 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 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
1. Clients immediate change of address / relocation - cannot be
located
2. Complacency and lack of supervision of Account Officers

Haphazard CI / BI and loan evaluation

Relaxed collection efforts (tolerance of delinquent clients)
3. Lack of follow-up training for Account Officers and Supervisors
4. Multiple borrowings of clients (from other lending institutions)
REMEDIAL MEASURES
1. Tutok, Dikit, Kulit Strategy

Rigid follow up of delinquent clients
 Demand letters
2. Follow up and collect from loan Co-Makers
3. Filing complaints against delinquent clients in the
Barangay Court
4. Seizure of personal/business assets of delinquent client
5. Regular evaluation of MF Supervisor, validation thru area
visits
REMEDIAL MEASURES
5. Re-training of Account Officers and other bank staff



Make sure loans are properly evaluated
Client validation visit
Regular monitoring of AO performance
6. Year-end branch and staff incentive based on:


Number of Active Borrowers and Loan Portfolio
Level of Portfolio at Risk
MICROFINANCE PERFORMANCE
5-YEAR PORTFOLIO AT RISK
850,000.00
650,000.00
450,000.00
250,000.00
50,000.00
Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007 Dec. 2008
PAR > 30 days Php
PAR > 7 days Php
MICROFINANCE PERFORMANCE
Performance
Indicators
Active Borrowers
Loan Portfolio
Field Staff
Cum. No. of
Loans Disbursed
Dec.
2004
1,478
Dec. 2005
Dec. 2006
Dec. 2007
Dec. 2008
1,296
1,233
1,709
1,580
5,391,896
5,518,089
8,851,910
9,439,937
17
12
11
15
11
10,865
14,785
18,621
23,897
28,814
6,506,900
Cum. Amount of
88,640,21
Loans Disbursed
8
119,772,970 149,770,043 192,294,151 236,960,171
LESSONS FROM EXPERIENCE
1. Hawklike staff performance monitoring is key to success
in microfinance
2. Preparing and training the staff in the basics of
microfinance lending is of utmost importance
3. Prudent conduct of CI/BI and Cash flow evaluation =
quality loan portfolio
4. Intensified collection efforts (no room to relax) =
disciplined clients
LESSONS FROM EXPERIENCE
5. Patience is a virtue in dealing with both AOs and clients
6. A good relationship with clients encourages loyalty
7. Give to Caesar what is due to Caesar – branch incentive
program works!
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