Housing MF - Cantilan Bank

8/9/2019 Housing MF - Cantilan Bank

1/36

HOUSING MICROFINANCECANTILAN BANK EXPERIENCE

BRIG. GEN. CHARLES Y. HOTCHKISS (RET.)Chair Executive CommitteeCantilan Bank, Inc.


2/36

MABS offered the concept and technicalsupport;

As part of Cantilan Banks mission to deliverexcellent banking and countrysidedevelopment services.


3/36

Designed survey

questionnaire

Conducted market

research to selected

existing micro and

salary loan clients

as well as

depositors

Processed the data

and developed the

initial product

design

Conducted focused

group discussion to

finalize the product

design


4/36

Incremental/ progressive approach; Varied purposes;

Loans and small savings are sources of funds;

Credit habit: Loans ranging from Php5K to Php200K; Amortized mode of payment;

No collateral

Credit preference: Separate loan; Longer loan term; and

No collateral.


5/36


6/36

LOAN PURPOSE:Any fixed improvement or repair of any type to fixed dwelling property

- Installation/replacement of roof, floors, walls, windows, kitchen and

bathroom).

- Productive Housing fixed improvements or extensions related to ahome-based enterprise (HBE) or on-site production

- Development, addition or extension of rooms or housing units for rent

- Upgrading security (fencing or burglar bars)

- Connection to public utilities like water, sewerage, electricity.

- Water harvesting or collection with water tanks- Land registration costs related to the purchase/lease of land for

residential or business purposes


7/36

TARGET CLIENTS: Existing microfinance (individual loan) clients for at least 1

year;

Repayment rate of at least 80% from the existing or previous

loan Borrowers may be home and/or land owners or renters.

Have only 1 loan at the time of HOME loan application;


8/36

Loan size from Php5K to Php150K;

Maximum loan increase of 30% every repeat loan; Combined loan amortization for existing Micro

Enterprise Product and Housing at most 50% of

disposable income;

Handled by existing HMF-trained AO; Loan term: first loan up to 12 months repeat up to 18

months

Interest rate same with existing micro loan;

Weekly, semi-monthly or monthly modes of payment;

All loans require savings equivalent to 20% of the loan amount.


9/36

Built-in Advantages:

Used the same CIBI & Cash Flow analysis;

Clients are known by character and capacityto pay;

Clients are used to the credit discipline;

Demand from among the existing clients.


10/36

Pilot tested

in two (2)

branches:Cantilan

Tandag

Handled by

one (1)Account

Officer per

branch

Pilot testing

started

October

2008

Target for

May 2009:

20 accountswith

0.300M

loan

portfolio


11/36

Poor performance What went wrong?

Pilot testing target

20

accounts

0.300M

loan

portfolio

Actual performance at the end of pilot phase

May 2009

4 accounts

0.184M

loan

portfolio

Compliance with the pilot phase

target

20% as to number

of accounts

61% as to loan

portfolio balance


12/36

Causes:

Weak drive;

Account Officers turnover

Fear of PAR perception that giving more

loan to clients will increase delinquency


13/36

Operational Aspects: Evaluated the performance;

Identified bottle necks;

Simplified loan documentations;

Conducted retraining and training of other AOs to rolloutbranches;

Targeted potential clients with precision

Set targets on a weekly basis to achieve;

Intense weekly monitoring;

Forged a commitment with everyone.


14/36

Policy: Opened up the loan to all MEP clients (individual,

group and even depositors);

Upfront deposit requirements of 20% of the loan

was reduced to 10%; Employment of a concentrated AO to boost the

production for a defined period;

Roll-out to the branches.


15/36

Actual for June 2010

From 4 to 280accounts

From Php184K loan

portfolio to

Php3.8M loanportfolio


16/36


17/36


18/36

Before After


19/36


20/36


21/36


22/36


23/36


24/36


25/36

Living Room Area Dining Room Area


26/36

Dining RoomLiving Room Dining Room


27/36


28/36


29/36


30/36


31/36


32/36


33/36

Enhancementsby giving

incentives to

clients

Implementation

of a longer term

and up to

Php300,000

maximum loan

Roll-out to

another 6

branches

(geographic

expansion)


34/36

Commitment is a must (top to bottom); Bottle necks should serve as challenges not

a hindrance; Commitment to pursue should be felt down

the line; There should be targets and a well planned

operational plan; Market sensitivity is important for product

customization; Initiatives and continuous enhancements;

LEAD TO SUCCESS...


35/36

Housing Microfinance is one of the bestproducts for helping poor people get adecent shelter, but commitment to properimplementation is key.

Fear of the unknown is best dispelled byconcrete demonstration that something newcan and will work.


36/36

Housing MF - Cantilan Bank

Documents

Transcript of Housing MF - Cantilan Bank