Proposed Organizational Set-up to Implement BRR & FRR in a Cooperative

Guidelines on the Organizational Aspect Implementation of the BRR should be as objective as possible. Personnel who will prepare the BRR should not be part of the approval process of a loan. Preferably, the person preparing the BRR should be performing a support function rather than a line function. Example: those doing “audit” functions, credit policy supervision, those equivalent to the function of “compliance” officer as in a bank.

Guidelines…… Raters should be personnel without contact with the client. BRR shall be based on documents submitted by the client or generated by uninterested parties to the loan. There should be a clear appeal process in place to pinpoint who would referee between the rater and the AO esp. if the BRR is used in pricing a loan. Succeeding BRRs shall be done in the same way – detached from staff who are directly involved in monitoring the loan. AOs could prepare the BRR for as long as there is a Group / person who will audit and vouch that the rating is a fair reflection of the borrower’s risk rating.

Sources of Information Application form and other submitted documents Your own initial interview form Credit investigation report / Appraisal report Project visit / employees & workers Customers and suppliers Industry associations Lessors, neighbors, barangay officials/employees Personal observation Coop’s own records

Topics for an Interview (5 C’s of Credit) Sample questions indicative of: a. Character b. Credit c. Capital d. Capacity e. Condition