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Risk review continued
applicants. This process is supported by
experienced branch management who
make the final decision after confirming
a client’s affordability and commitment
levels. Repeat loans are granted using a
credit policy which is supported by a
behavioural scorecard to offer clients
different loan sizes, terms, and interest
rates depending on the client’s profile.
The positive impact of the scorecard has
been very significant, boosting sales to
the right client and playing a role in
improving collections efficiencies in the
call centre. A second-generation
scorecard is about to be introduced,
which will lead to improved predictive
capacity.
Information gathered from clients
during the interview process is used
to determine income, expenditure and
existing debt commitments. Branch staff
also confirm employment and term
of employment. This information is
supported with bureaux enquiries
which together with the demographic
information form the basis of the
application scorecard to decide on an
appropriate loan offering for new clients.
New clients without a track record can be
granted a loan and are often migrated
over a period of six months from smaller
loan sizes and shorter repayment periods
to longer repayment periods once they
have had an opportunity to establish a
positive internal credit rating.
The business has undergone a number
of strategic changes that had a positive
impact on debtor management. These
include the following:
The introduction of contractual
delinquent ageing of the book at
branch level. The impact of this
includes:
– Automated and early escalation
of NPLs and first payment
defaulters to the collections call
centre. This has resulted in an
improvement in late stage
collections in the call centre.
– The introduction of a new
telephone call and letter strategy
for current and arrears accounts.
Current clients can theoretically
African Bank Investments Limited 66
go for up to 59 days without
being in arrears, hence the soft
follow-up strategy. This has
resulted in improved client
relations as well as increased
collections.
A consistent, automated write-off
rule that ensures that bad debt is
written off monthly and assigned to
external agents for collection.
The introduction of a dynamic
provisioning tool that has ensured
consistent, accurate provisions each
month based on historic statistical data.
Unique policy treatment for clients
who apply for section 58s (consent
to judgment) and for clients who are
migrated to the call centre – a
rehabilitation policy is in place to
ensure that once cured, these clients
have another opportunity to apply
for a new loan under controlled
conditions.
Dynamic data management and
reporting capabilities has given the credit
team confidence to be able to monitor
the condition of the book on a regular,
consistent basis. Management retains an
absolute focus on the credit model,
coupled with strict control over policy
changes and regular exception reporting.
Miners Credit Guarantee
MCG is primarily focused on the
advancing of loans into the gold and
platinum mining sector. The Teba Secure
Data Net (“TSDN”) system houses the
predetermined credit policy governing
the vetting process – probably best
described as the mining loans register.
This credit policy consists of an industry
scorecard, taking cognisance of:
Affordability;
An individual’s credit exposure;
Deferred pay restrictions in respect
of foreign mineworkers;
Electronic pay restrictions such as
minimum take home pay
requirements; and
Ranking of loans granted on a
FIFO basis.
The MCG interface to the TSDN system,
Creditnet, is linked to the front office
system which affords real-time
communication into its central data
system. Key factors of the system are:
Limited access through user profiles
to limit fraud and protect client
confidentiality;
Optimisation of the product offered
to clients to meet their needs;
Enhancement of the credit rules
provided by the TSDN system;
An independent audit trail for
comparison to TSDN reports;
Allows for electronic or cash
disbursement; and
Quick turnaround time
(approximately five minutes from
vetting to approval and
disbursement).
Further mitigation is obtained to cover
the risk of a homogeneous employer
environment. To this end, longer-term
loans are covered by purchasing credit
life cover from the insurance industry as
opposed to “self-insuring” the risk. This
cover is granted without qualification
and covers death and retrenchment.
Debtor administration
All loans are electronically vetted. The
system communicates real-time with the
TSDN system, which allows for an
automatic reconciliation process and
supports early identification and
rectification of anomalies. Repayments
are by way of direct deduction against
the client’s Teba savings account.
Collections are receipted daily due to
the nature of the pay cycles (anniversary)
on the mines. These receipts are
updated daily, thus ensuring reliable
vetting and affordability criteria at the
front office.
Collections
Payments entering 30 day arrears are
electronically flagged and status codes
are allocated, eg leave, bonus pay, etc.
Clients who have invalid reason codes are
immediately handed over for collection.
In addition, clients with three consecutive
months in arrears and valid reason codes
are also handed over. Client management
teams meet with the union and employers