Proposed Organizational Set-up to Implement BRR & FRR

in a Cooperative

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.

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.

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

Sample questions indicative of:◦a. Character◦b. Credit◦c. Capital◦d. Capacity◦e. Condition