Collection Rates
: Calculation:
The Actual cash
collected divided by the principal amount that have
fallen due to be paid. This is also known as the
repayment rate or the recovery rate and is considered
the most common indicator.
Arrears Rates
: Calculation:
The amount of late
payments or overdue amount divided by the total loan
amounts/outstanding loan portfolio. This is the
second most common indicator.
Portfolio at Risk Rates
: Calculation: The
outstanding balance of loans that are not being repaid
on time divided by the outstanding balance of total
loans. This is the international standard for measuring
bank loan deficiency.
DELINQUENCY INDICATORS
Amounts Collected
Amounts fallen due
Overdue Amounts
Total loans
Outstanding balance overdue payment (s)
Total outstanding balance
MANAGEMENT OF DELINQUENCY
Regular Review
of lending policies and
procedures:
The economic environment is
dynamic. Financial Institutions are sensitive
to economic
developments hence regular
revision of credit policies and loan
procedures is
prudent to complement the
current economic trend.
INSTITUTIONAL IMAGE
AND PHILOSOPY
Disciplined borrowers are critical
for the success of Financial Institutions.
This involves
the conditioning of existing and potential borrowers
behavior promoting
a positive mindset to loan
repayment. Financial Institutions must uphold an image
and philosophy that
“
LATE PAYMENTS ARE NOT
ACCEPTABLE
”.
