Coops trained on how to prevent and address delinquency

Delinquency or non-repayment of loans, is one of the major challenges of cooperatives in the Philippines. This is particuarly more prevalent in cooperatives compared to banks because they mainly cater to farmers who face a lot of risks related to agriculture.

Seven cooperatives from Northern Luzon attended credit competency training held in Northview Hotel, Laoag City, Ilocos Norte on February 18, 2019. The training aims to reduce delinquency and improve collection to ensure financial sustainability.

“This is by far the most useful training we attended. It offers easy to understand concepts and strategies in preventing and combating delinquency” said Alice, a management officer of the Isabela Grains Marketing and Production Cooperative.  

Participants were able to learn about loan portfolio risk management such as understanding delinquency, borrower’s perspective on delinquency, measuring delinquency, client selection techniques, and loan application processing. 

Understanding delinquency session focused on its causes and costs. Participants were asked to list major causes of delinquency and categorize whether the cause is due to organizational, client or external factors. The session highlight was to make the participants realize that zero delinquency is an attainable and reasonable goal that requires the commitment of the institution.

The next session made the participants reverse their role and imagine themselves in the shoes of the borrower. They assumed the perspective of the borrowers and identified the benefits and costs of on-time and late payments. This made them realize the importance of emphasizing the benefits of on-time payments to encourage repayments rather than focusing on penalizing borrowers. 

Participants also learned how to measure delinquency that enabled them to claculate for the past due and portfolio at risk ratios easier and faster. Many of the participants revealed that this was the first time they understood the importance of these measurements and took them to heart. 

Succeeding discussions dealt with client selection techniques and loan application processing. The cooperatives were introduced to character-based lending (CBL) and to core components of credit and background investigation (CIBI). CBL and CIBI require investing more time and energy in preparing, to avoid repairing delinquent accounts in the future. 

Social Enterprise Development Partnerships, Inc. (SEDPI) was the successful bidder for this project under the Department of Agriculture’s Agricultural Credit Policy Council (ACPC). This is the first of six batches that will also be held in Cagayan de Oro, Davao, Iloilo, Koronadal and Laguna.

Jovena Antiporda, Angelica Reyes and Jerome Sinangote were the lead facilitators for the training. SEDPI President, Vince Rapisura, who joined the team, was also in charge of the design and development of the training.