Presentation Print Temp

CREDIT PRODUCTS,
CREDIT OPERATION CREDIT PROCESS AND

MANAGEMENT CREDIT ACTIVITY
WORKFLOW
PREPARED FOR:
UNIVERSAL BANKER MODEL TRAINING
SELF INTRODUCTION AND TRAINING NORMS
 Facilitator  Norms/Rules
 Attendees:  Mobile Phones on  Respect Opinion
 Name Silent Mode of Others
 Education and  Share your Practical  Active
Experience Experience Participation
 Department/  Punctuality (Lateness  Negative energy
District/Branch you is a sign of Laziness) is not acceptable.
came from
 Absenteeism is  Attentiveness
 What you like most intolerable
and what you  Apply COVID-19
dislike most Protection Tools
SCOPE OF THE TRAINING
Credit Products,  CAF and its attachments,

Credit Product Nature and  Due Diligence Assessment,
Features,  Collaterals,
General Eligibility Criteria,  Decision Making Process &
Specific Eligibility Criteria, Decision Making Organs,
Credit Activity Workflow  Credit Disbursement,
Common Mistakes in Credit  Credit Monitoring and NPL
Activity Management.
TRAINING DELIVERY METHOD
 Brief Presentation
 Group Discussions
 Questions and Comments
 Case study
 Self Assessment Test

OBJECTIVES OF THE TRAINING
 At the end of the training, participants will be able to:
 List and explain all credit products, their features and natures of each
credit products,
 Describe general and specific eligibility of each credit products,
 Appropriately explain credit activity workflow of the bank,
 Explain credit appraisal mechanisms, collateral accepted by the bank and
risk rating of the bank,
 Explain due diligence assessment tools, collaterals, credit decision
making process of the bank,
 Properly describe required document checklist, how to correctly prepare
CAF and basic documents attached to CAF.
 Exhaustively identify and eliminate weaknesses/common mistakes in
credit activity.
VISION & MISSION OF OB
Vision of OB
“To Become the Bank of Your First Choice”
Mission of OB
We are committed in providing full-fledged and best quality commercial
banking services within the pertinent regulatory requirement with due
diligence to sustainable business while empowering the missing middle and
discharging social responsibility by engaging highly qualified, skilled,
motivated and disciplined employees and state-of-the- art information
technology, adding real value to the shareholders’ interest and win the public
trust.
VISION OF OB
• Employees • Customers • Shareholders

• Choose the bank to • Prefer to bank • Happy to invest
work for with in
In general, OB’s vision statement stipulates that the Bank strives

to fulfill the interest of all stakeholders.
MISSION STATEMENT
 The important parts mission statement are:

 Full-fledged and Quality Banking Services: All rounded domestic
(interest based and Interest free) and international efficient and
effective commercial banking services.
 Regulatory Requirement: Compliance with both domestically and
internationally applicable regulatory requirements.
 Business Sustainability: About securing reasonable and steady
business growth through balancing financial (short-term) and
strategic (long-term) objectives.
 The Missing Middle: Giving priority to small and medium enterprises.
CONT’D
 Social Responsibility: Acts in a way that encourages positive

impacts on the development and wellbeing of the society and
environment.
 Employees: Morally boosted, knowledgeable, helpful, courteous,
capable of delivering assignments, and endowed with the feeling of
belongingness to OB.
 State-of-the-art-technology: About deploying modern banking
services enablers like the latest CORE Banking Solutions, ATMs, POS,
automation, online lending, and others.
 Shareholders’ Value: Generate a reasonable return on investment in
consideration of strategic objectives.
Public Trust: The society’s confidence in OB.
Core Values of OB
The Core Values Descriptions
We value persistence, OB firmly dedicate our resources towards

endurance and tenacity. realization of the strategic objectives.
We value customer OB put customers’ satisfaction first, as it is the

satisfaction. foundation for every action in the Bank.
We value transparency, OB uphold honesty and reliability and promote
integrity and confidentiality. the sense of trust by way of keeping the
confidentiality of our customers' business secret.
We uphold team spirit and OB believe in participatory teamwork and self-
grooming potential development of employees.
successor.
Core Values of OB
The Core Values Description
We value respect OB has due respect for all stakeholders

We value competitiveness OB pay due consideration to secure and
and motivated human cultivate competent employees by putting in
resource with ever growing place competitive reward, training and
skills. development scheme.
We promote a learning and OB strive for creativity, continual learning and
innovative organization. benchmarking best practices.
We value belongingness. OB belong to the national and international
financial community.
We uphold corporate OB is responsible for the good of the society
citizenship and the environment.
OB CREDIT PRODUCTS
 Term Loans  Overdraft Credit Facility

Short Term Loans  Merchandise Credit Facility
Medium Term Loans  Import L/C Facility
Long Term Loans
 Advance on Import Bills
Term loans based on economic
 Pre-shipment Credit Facility
sector or nature of business
 Revolving Export Credit Facility
Consumer Loans
 Advance on Export Bills
 Bank Guarantee Facilities
GENERAL ELIGIBILITY FOR CREDIT PRODUCTS
 Any credit applicant needs to open either checking or saving

account at the lending branch of the OB;
 The applicant and/or its subsidiaries or any of its shareholders with
more than 10% equity investment shall have no active record of
NPL;
 The applicant should be able to contribute the required equity
contribution but not from debt financing;
 The applicant must not have active record of mal-operation of the
checking account in the banking system;
CONT’D
 The applicant has to present all the documents/ information

demanded by the Bank;
 Tax clearance proof document
 Audit report for loan request above 5 million ETB or more (for
business loans)
 The applicant’s intent of the loan must be only for legally
acceptable, financially viable, economically sound, environmentally
friendly and socially desirable purpose.
TERM LOANS
Definitions, Nature and Features

 Term loan is a loan granted to customers to be repaid within a
specific period of time on regular instalment basis.
 This type of loan can be provided to customers who are engaged
in all sectors of the economy.
 The loan is provided to meet working capital needs as well as for
project financing.
Specific Eligibility
 Individuals and business entities engaged in any type of business
can apply for this type of loan.
 A customer can borrower this loan and use it for smooth operation
of business activity.
SHORT TERM LOANS

 A short-term loan is a term loan which has a maturity period of not
exceeding one year from the date of disbursement.
 These are extended to finance the working capital needs and/or to
meet the short-term financial gap of the applicant.
 Individuals and business entities engaged in any type of business
can apply for this type of loan.
 A customer can borrower this loan and use it for smooth operation
of business activity.
MEDIUM TERM LOANS

 A medium-term loan is a term loan which has a maturity period of
longer than one year, but not exceeding a maximum period of five
years.
 It can be granted for working capital purpose or financing of
acquisition of capital goods or for expansion of existing business.
Maximum grace period of two years can be given.
 The loan may be charged a higher interest rate than the rate on a
short-term loan to reflect the risk associated with loan duration
and project financing.
CONT’D
 A detailed study of the capital investment project (Project

Feasibility Study and /or Business Plan). This requirement is not
applicable if the loan is intended only for working capital purpose.
 The applicant shall offer the entire assets of the project as

collateral.
 The project shall be financially feasible.

LONG TERM LOANS

A long-term loan is a term loan which has a maturity period of
longer than five years, but not exceeding a maximum period of 15
years for business loans or up to 25 year for non-business loans.
Maximum grace period of three years can be given.
It can be granted for working capital purpose or financing of
acquisition of capital goods or expansion of existing business.
Maximum grace period of three years can be given.
The loan may be charged a higher interest rate than the rate on a
short-term loan to reflect the risk associated with loan duration
and project financing.
CONT’D
 A detailed study of the capital investment project (Project

Feasibility Study and /or Business Plan). This requirement is not
applicable if the loan is intended only for working capital purpose.
 The applicant shall offer the entire assets of the project as

collateral.
 The project shall be financially feasible.

PROJECT FEASIBILITY STUDY AND/OR BUSINESS PLAN
CONTENT
 Executive summary
 Background and description of the Business
 Organization and management plan
 Marketing plan
 Production/Service Plan
 Financial Plan
 Environmental impact assessment, if any
 Prepared by professional person,
 Genuine and up to date information and data shall be included
in the business plan.
Project financing outline.docx
MOTOR VEHICLE LOAN

 A motor vehicle loan is a loan extended to borrowers in the form
of a term loan only for the purchase of brand-new motor vehicles
to support the finance needs of the transport business (i.e., dry
cargo, fuel, and public transport service). The financing amount
can be up to maximum of 70% of the pro-forma invoice of the
motor vehicle.
 The financing amount can be up to maximum of 70% of the pro-
forma invoice of the motor vehicle.
 The purpose of the loan is to alleviate financial constraints of
entrepreneurs operating in the transport.
CONT’D
 The motor vehicles shall only be new brand.
 If the motor vehicle is to be used in the transportation sector, it
should have the following minimum loading capacity
(manufacturer’s loading capacity):
For dry cargo transport: a truck with trailer & 300 quintals loading
capacity, and without trailer above 35 quintals of loading capacity.
For fuel cargo transport: a fuel tanker with trailer & 40,000 liters
loading capacity.
For public transport: a bus with 25 seats and more.
For dump truck: with loading capacity 7m3
CONT’D
 The loan could also be extended to other business sectors as

well to buy other types of vehicles including large, medium, or
small-sized trucks, mini-buses, pickups and automobiles that are
needed to facilitate the borrower’s existing business or as a
component of a project.
 Equity contribution shall be at least 30% of purchase value the

vehicle to be bought.
CONT’D
 If an applicant contributes more than 40% of purchase value, the

loan may be extended with no requirement for additional
collateral. In case collateral is required acceptable collateral
shall be offered.
 For other types of vehicles with capacities below the minimum
loading/seating capacity indicated above, the customer shall at
least make equity contribution of 50% (fifty percent) of the
purchase value.
 For fuel cargo, an applicant should submit tripartite agreement
(Borrower, Association, and oil company),
CONSTRUCTION MACHINERY LOAN
 A construction machinery loan is a loan extended to our customers

in the form of a term loan only for the purchase of brand-new
construction machinery such as dozers, graders, loaders,
excavators, scrapers, rollers, asphalt pavers, crushers, concrete
batching plants, concrete pavers, cranes, drilling rigs, wagon drills,
and chip spreaders.
 This product is intended to alleviate the shortage of finance in the
construction sector.
CONT’D
 The construction machinery shall only be new brand.
 Equity contribution shall be at least 30% of purchase value of the

machinery to be purchased.
 The amount of the equity contribution shall, however, be

determined based on the type of business, the borrower’s relevant
experience and the additional collateral offered.
CO-FINANCING LOAN

 A co-financing loan is another form of term loan that is provided
by and shared between our bank and other banks due to the size
of the finance, liquidity conditions, and the magnitude of the risk
involved.
 The purpose of co-financing loans is to finance medium or long-
term investment ventures that demand a large amount of funding
together with other banks, to share risk, and to reduce liquidity
problems.
CONT’D
 Eligibility may depend on the nature of a loan requested.
 When other banks invite OB for co-financing the following issues

has to be considered:
The amount of the loan; The liquidity position of the OB and the
lead bank; The nature of the project; The share of the finance; The
risks involved; and the experience and expertise of the lead bank.
AGRICULTURAL INPUT LOAN

 An agricultural loan is a term loan granted to alleviate the financial
constraints of the agricultural sector to finance agricultural inputs
(fertilizers, agro-chemicals and improved seeds), purchase of
agricultural machinery, working capital finance and investment finance to
large and modern commercial farms.
 An agricultural term loan is also extended to assist smallholders farmers
with financial constraints for the purpose of purchasing agricultural
inputs and small farm equipment and tools.
CONT’D
 Smallholding agricultural loan applicants have to organize
themselves into an association and acquire legal personality from
the concerned government and shall also:
a.Establish accounting and farm-record system,
b.Employ a Manager and an Accountant/Bookkeeper;
c.Present minutes of a resolution passed by at least three-fourths
of the members of the General Assembly of their cooperative/
association;
d.Present update financial statements.
REAL ESTATE DEVELOPMENT LOAN
 Real estate development loan is a term loan granted to real estate

firms to alleviate the financial constraints of the housing
construction sector in the form of medium and long-term loans
for the purchase or construction of residential or commercial
buildings.
CONT’D
a. For a Mortgage Loan, the borrower’s buildings should be held as
collateral and registered as such with the appropriate government body.
b. The minimum equity contribution of the applicant for business building
loans should not be less than 40% of the project cost. The source of
the equity should not be bank finance or any other debt financing.
c. The applicant has to construct or purchase a building in Addis Ababa
and/or in any of the major towns/or any other towns in the country
where sustainable development is observed and OB believes in it.
d. Project Feasibility Study and/or Business Plan shall be submitted
(Demand supply gap analysis shall be submitted).
CONSULTING FIRM FINANCING LOAN
 Consulting firm financing loan is a form of short-term loan extended

to firms engaged in rendering of consultancy services such as
Engineering, Information and Communication Technology,
Economic issues, Law, Accountancy, Management, Architecture, Art,
etc.
CONT’D
 Valid professional license from the concerned government body.
 Up to date financial statements (Audited or provisional) including

forecasted cash flow statement and business plan.
 Contract justifying the existence of the business at hand.

LOAN FOR MICRO-FINANCING INSTITUTIONS (MFIs)
 The MFIs loan is mainly availed in the form of term loans that
are repayable within a specific period of time with a negotiable
interest rate.
 We extend credit to the MFIs for their on-lending purpose to

alleviating their financial constraints in providing credit to micro-
entrepreneurs and to the low-income segments of society.
CONT’D
 MFIs should have a high-quality loan portfolio, saving mobilization, loan-
approval system, loan recovery performance and similar performance
indices.
 MFIs should also ascertain that they are legally registered with the NBE
and abide by and meet all relevant NBE policies and directives regarding:
 Reserve requirement;
 Liquidity requirement;
 Capital adequacy requirement; and
 Minimum paid-up capital requirement and others.
 MFIs that could obtain a credit-guarantee scheme from the concerned
organ should come up with at least 50% of the principal loan as security.
IDEA FINANCING LOAN
 Idea financing loan is a term loan that is granted for the purpose of
implementing invention and innovation aiming at commercial
purpose, which has got recognition by the concerned government
organ (i.e., from the Intellectual Property Right Protection Office).
 The loan can be granted for the purpose of supporting

commercializing or for mass production and marketing of the
product.
CONT’D
a) The applicant shall present an Intellectual Property Right

Certificate.
b) The applicant shall present valid investment or business license.
c) The applicant shall submit feasibility study.

PARTIAL FINANCING OF FORECLOSED COLLATERALS

 Partial financing is a financing scheme whereby our bank covers a
portion of the auction price of foreclosed and acquired properties
(buildings, vehicles, machinery, and business establishments)
presented for sale.
 The purpose of partial financing scheme is to expedite the recovery
of our Bank’s non–performing loans and to foster the disposal of
acquired properties.
 The applicant has to win auction or willing to purchase the properties.
 Down payment 40% to 60% of auction price
LOAN FOR SAMLL-SCALE ENTERPRISE
 Small-scale enterprises are those businesses with a paid-up

capital of more than Birr 20,000 and up to 500,000, but excluding
high-tech consultancy firms and other high-tech establishments.
 These enterprises employ about 11-49 workers.
 Small-Scale Enterprise Loans are generally approved to alleviate
the financial constraints of small-scale enterprises in financing
projects of a short-term nature and/or Medium-Term Loans for
business/projects whose cash flow over time justifies the loan.
CONT’D
 The borrower must have at least adequate management
experience, employ proper bookkeeping, submit a properly
drawn-up business plan and meet any other requirements
necessary to effectively run the business.
 Small-Scale Enterprises that could obtain a credit-guarantee

scheme from the concerned organ should come up with at least
50% of the amount of the principal loan as security.
• MS, TM and Value Propositions.docx
GROUP DISCUSSION
 A customer came to Oromia Bank Branch and explained about his

business. He is planned to construct G+13 mixed use building in Finfinne.
He need financing from OB.
 Which credit product type is favourable for this request?
 In terms of maturity period, where we categorize this request.
 What are the benefits of this credit product for a customer?
 What are the main requirements a customer shall present?
 Discuss and explain Motor Vehicle and Construction Machinery loan
features, their difference and what makes them similar.
 Why OB want to finance customers working in agriculture sector? If a
customer came to your branch to get agriculture loan, how do you advice?
Which maturity period do you recommend for this sector? Discuss and
Explain.
OVERDRAFT CREDIT (OD) FACILITY

 An overdraft credit facility is a fluctuating, short-term, limited credit
facility available on demand/current accounts.
 Overdraft facility is availed only for working capital purpose.
 It may be reviewed and renewed on annual basis if satisfactory
performance is witnessed. The performance of the facility is
measured by its swing and turnover.
 OB avails three type of OD credit facility:
Regular O/D Credit facility (renewable),
Temporary O/D Credit facility
Over-drawal
CONT’D
 A fresh overdraft credit facility may be extended to an applicant who has
established at least a banking relationship with the OB and/or other
Banks as a borrower or depositor and commenced operation.
 The business must be in operation after receiving a trading license. In
exceptional circumstances, however, the request of customers/owners
who had experience in some other business may be considered;
 The borrower or his/her legal agent must submit a renewal request for
regular overdraft credit facility one month prior to the expiry date, and
the Bank should advise the customer accordingly;
 The outstanding balance of the regular Overdraft Credit Facility must be
within the approved limit at the time of the processing of the renewal;
CONT’D
 The Bank may buyout the Overdraft facility with the other bank,
provided that the customer has good utilization of it and his/her/its
current assets also justify the proper utilization of the overdraft
facility.
 As the nature of an Overdraft facility is risky, it must be secured by
collateral—buildings (residential or business premises) or other
strong securities, such as cash deposits, bank guarantees and
government securities.
 Nonetheless, the Bank may approve an Overdraft facility against
depreciable assets, such as vehicles and machinery.
CONT’D
The Over-drawal’s of Overdraft Credit Facility amount should be

25% of the approved Overdraft limit.
Seasonal or temporary financial needs should not be entertained

by regular Overdraft Credit Facility except by Overdrawing of
Overdraft Credit Facility Limit or Temporary Overdraft Credit
Facility;
OD classification as per NBE directive SBB/069/2018.

• ..\PPT doc\OD_Classification.doc
MERCHANDISE CREDIT FACILITY

 Merchandise facility is a short-term credit facility provided against
which the merchandise or documentary evidence (Railway Receipt,
and Airway bills and Warehouse Receipt) is held as a pledge or
collateral for the loan.
 The facility is granted when huge amount of working capital fund is

tied up on stocks and the applicant is in short term liquidity problem.
 MCF can be one time or revolving/Renewable.

CONT’D
 Merchandise loan facility shall be granted to customers who have
proved to be highly credit-worthy in their relation with the OB and/or
other Banks.
 Merchandise Credit facility against submission of a stock list may be
granted only for those customers with credit risk grade “AAA” per the
Bank’s Credit Risk Rating.
 Goods having a short shelf life, perishable goods and/or slow-
moving items will not be accepted as collateral and also not eligible
for a Merchandise Loan facility unless specifically approved by the
EMCC. List of some of the goods falling under this category are:
 Chemicals; Packed food; Packed water; Salt; Pharmaceuticals;
Batteries; Butter; Oil; Yeast and similar other perishable goods
CONT’D
 In order to be acceptable as security, merchandise must also meet the
following conditions:
i. Its value must be determinable;
ii. It must easily marketable or fast moving;
iii. Its price relatively stable;
iv. The product must be insurable.
 The ownership title of the merchandise to be pledged should be
ascertained through documentary evidence. For imported goods,
customs declaration must be presented. For locally purchased
merchandise, on the other hand, valid invoices should be presented, if
any. And for manufactured goods, internal documents (production
reports, for example) have to be presented.
CONT’D
 The Bank must be entitled to possess the goods and must have
unconditional legal right to sell them in the event of default by the
borrower
 Individuals, companies, co-operatives, unions, state farms and
commercial farms upon delivery of the negotiable warehouse
receipt issued in their name by licensed warehouse operator
accepted by the Bank, can apply for a Loan against a Warehouse
Receipt.
 The EMC shall review the list of licensed warehouse operators
annually to shortlist warehouse operators acceptable to the Bank.
IMPORT LETTER OF CREDIT (L/C) FACILITY

 A letter of credit is a credit instrument issued at the request of an
importer through which our bank commits itself to a payment
undertaking to pay a seller (exporter) a given amount of money upon
presentation of specified documents representing the supply of
goods and the documents conforming to the terms and conditions
agreed by the importer and exporter.
 The minimum facility margin shall not be less 30% of the document
face-value in line with existing NBE’s directives.
 It can be one time or renewable/revolving depending on the nature of
the request.
CONT’D
 An Import Letter of Credit Facility is availed to those customers
who will import goods eligible for import. A list of goods eligible for
import may be obtained from the NBE at the time of opening of the
Letter of Credit.
 The importers applying for a Letter of Credit Facility shall present
their import trade licenses or investment licenses as appropriate.
 However, in the case of non-importers applying for a one-time
Letter of Credit, investment certificate and pro-forma invoice not
later than 60 days from the date of its issuance shall be accepted.
ADVANCE ON IMPORT BILLS

 Advance on import bills is a type of credit facility which is designed
to accommodate the non-withdrawal of import documents by the
importer.
 It is granted for valuable customers who cannot be able to clear the
L/C document due to temporary financial constraint.
 The facility is given for a maximum period of sixty days.
 Same with above, which stated under L/C Facility
IMPORT LETTER OF CREDIT SETTLEMENT LOAN
 Import letter of credit settlement Loan is a form of term loan

extended to a borrower by converting the outstanding import letter
of credit document’s value to short term loan and releasing the
import document.
CONT’D
 The customer shall be with lowest credit risk to the Bank per the Bank’s
rating or offer a strong collateral for the loan.
 The customer shall be existing and/ or who initially opened the L/C with
OB.
 When the customer encountered temporary cash flow problem to settle
the balance net-of-margin-held on the import L/C document value.
 Before releasing the import L/C document, the bank should conclude a
term loan and mortgage/pledge (if any) contracts with the applicant
and make collateral registration (if any) with appropriate registrar office.
Pre-shipment Export Credit Facility
 Pre-shipment export credit facility is a loan extended to
exporters for purchase of raw materials, processing and
converting it into finished goods/ready for export, transporting,
warehousing the goods, and packing it until such time as the
goods are shipped.
 The facility is availed against export contract or export letter of
credit at pre-defined advance rate ranging from 70% up to 100%
of the document value depending on the reputation of the
borrower (exporter).
a)The exporter should present a bona-fide order from a reputable foreign
buyer or an Irrevocable Letter of Credit, in addition to the sales contract in
case of a new buyer.
b)New exporter should offer acceptable security to cover the loan in line
with the NBE’s Directive.
c)Existing exporters and traders should have a sound export performance
record.
d)Reputability of the foreign buyer shall carefully be examined.
e)Reliability of supply of Goods/Raw materials to produce the export goods
shall be confirmed.
f) It shall be assessed that there will be alternative foreign market for the
product(s) to be exported.
REVOLVING EXPORT CREDIT FACILITY
 A revolving export credit facility is an advance extended to

exporters upon presentation of acceptable export documents
except a bill of lading.
 The documents must confirm that the goods are in transit for
shipment.
CONT’D
 The exporter should present a bona-fide order from a reputable foreign
buyer or an Irrevocable Letter of Credit, in addition to the sales contract in
case of a new buyer.
 New exporter should offer acceptable security to cover the loan in line
with the NBE’s Directive.
 Existing exporters and traders should have a sound export performance
record.
 Reputability of the foreign buyer shall carefully be examined.
 Reliability of supply of Goods/Raw materials to produce the export goods
shall be confirmed.
 It shall be assessed that there will be alternative foreign market for the
product(s) to be exported.
ADVANCE ON EXPORT BILLS
 Advance on export bills is a type of post-shipment export credit

provided to exporters upon presentation of all relevant export
documents.
CONT’D
 An Advance on Export Bills can be made to any exporter who
presents complete and satisfactory export documents in
compliance with the terms and conditions of the Letter of Credit.
 Before crediting the advance amount to the customer’s account,
nonetheless, due care should be taken in checking whether the
customer has already received a Revolving Export Credit or a Pre-
Shipment Export Credit on the same document, and if any
Revolving Export Credit or Pre-Shipment Export Credit should be
settled first.
EQUIPMENT/MACHINERY LEASE FINANCING

 Lease financing is a short/medium loan provided to lessee who
wants to acquire equipment and machinery for use in business
operation through lease/rent.
 The assets include factory machinery, earthmoving machines,

construction machinery, motor vehicles, combine harvesters, tractors
etc. that are considered as essential to conduct business in any
sector of the economy.
CONT’D
 The applicant/lessee shall have at least one year work experience in
the business.
 The applicant/lessee shall submit lease agreement document

registered by an authorized body.
 The lease period shall not be greater than estimated life period of
the equipment /machinery.
 It has to be checked that the lessor has license to lease.

LOAN BUYOUT

 Loan buyout is a type of loan/credit facility arrangement wherein
our bank buys loans/credits from other banks.
 Our Bank involves in this activity if it believes that buying of the
loan is beneficial for OB to get more business or to secure its
interest in connection with previously granted loan.
 The request shall be according to the general eligibility and specific
loan type requirement of the to be bought loan from other banks.
KUSA CLUB FACILITY
 This is a new credit product developed to serve the credit needs

of youth groups within the age of 25-32 who have established
long-term banking relationship and adequate deposit
performance.
CONT’D
 The customer shall establish at least four years deposit relationship
with OB;
 Kusa Club Members get 10% better loan to equity ratio with
collateral requirement of at least 50% of the loan;
 The customer shall consistently channel all its periodic sales
through the account maintained at OB;
 The customer shall not maintain deposit account at any other banks;
 The customer’s age shall be within 25-32 years;
 Adequacy of its deposit transaction shall be checked against the
amount of loan requested;
EGERE LOAN ACOUNT (CAR LOAN)
 It is an account aimed at getting future loan for purchasing of

multi utility vehicle.
 The customer shall at least deposit 30% of the total financing

requirement before applying for loan.
 A customer should deposit with the Bank for a period not less
than 3 years and deposits shall be made at least every quarter.
CONT’D
 It is an account aimed at getting future loan for purchasing of
multi utility vehicle;
 The customer shall at least deposit 30% of the total financing
requirement before applying for loan;
 A customer should deposit with the Bank for a period not less than
3 years and deposits shall be made at least every quarter;
 The car or any acceptable property as per the Credit Policy of the
bank should be held as collateral.
EGERE LOAN ACCOUNT (BUSINESS FINANCING LOAN)

 It is saving deposit aimed at getting future loan for investment or
working capital.
 The customer requests the loan after minimum deposit balance
reached 20% of the required loan.
 A period of not less than three years is required to request
business loan and deposit should be made at least every quarter.
 Collateral requirement shall be reduced up to 25-40% based on the
credit worthiness of the borrower.
CONT’D
 It is saving deposit aimed at getting future loan for investment or
working capital;
 The customer requests the loan after minimum deposit balance
reached 20% of the required loan;
 A period of not less than three years is required to request
business loan and deposit should be made at least every quarter;
 Collateral requirement shall be reduced up to 25-40% based on
the credit worthiness of the borrower.
• MS, TM and Value Propositions.docx
GROUP DISCUSSION
 What is the difference between OD Facility and Term Loan? Explain.

 Explain the benefits and costs related to OD facility to the bank and customer.
 What are the OD classifications based on NBE directives.
 What is the nature of Merchandise Credit Facility? If a customer with a stock of
edible oil request you to provide this credit facility, how do you entertain the
customer?
 Explain the relationship between Import L/C and export pre-shipment loan and
their benefit to a customer.
 Explain how disbursement of OD, Merchandise, L/C facility, Pre-shipment
facilities are undertaken. How repayment of Pre-shipment facility is made?
BANK GUARANTEE FACILITY
 A bank guarantee issued by our bank is a written promise to

compensate (pay a sum of money) to the beneficiary (local or
foreign) in the event that the obligor fails to honour its obligations
in accordance with the terms and conditions of the guarantee
contract.
 Bank guarantees are unconditional and irrevocable when a claim is

presented.
CONT’D
 A permit from the NBE shall be obtained for any form of guarantee
that the Bank is requested to issue to foreign beneficiaries. This
requirement shall not apply in the case of Local Guarantee.
 A letter of authorization from the applicant shall be obtained to
debit his account to collect guarantee fee/commission before
issuance of the guarantee.
 The applicant shall submit all relevant contractual agreements
made between the beneficiary and the guarantee applicant when
deemed necessary. However, the Bank shall not commit itself to
the terms and conditions stated in the contractual agreements.
CONT’D
 When a correspondent Bank request OB to issue such guarantees,

the following guidelines shall be observed:
1) Make sure that the request is authenticated.
2) Review the credit standing of the counter-guaranteeing Bank.
3) Obtain advice from the legal service department to ensure that
there are no ambiguous terms and conditions.
4) Make sure that the terms and conditions (both legal and
business) are acceptable to the Bank. Legal matters shall be
referred to the Legal Service Department.
CONT’D
5) Make sure the mandate and to what extent the counter-

guaranteeing Bank can issue the Bank guarantee.
 All applicants requesting guarantee against securities different

from Deposits at Bank, Treasury Bills and Government Bonds are
requested to submit financial statements and other relevant
documents as deemed necessary.
BID BOND GUARANTEE
 Bid/tender bond guarantees are guarantees issued by our Bank in

favour of a designated beneficiary upon the request of the bidder,
representing the commitment of our Bank to meet the claims that
may be made by the beneficiary in the event that the bidder
withdraws from the bid during the bid period or fails to accept the
award when he/she becomes the winner.
PERFORMANCE BOND GUARANTEE
 A performance bond guarantee is a type of guarantee that our

Bank issues in favour of a beneficiary at the request of the bid
winner to meet any claims to be made by the beneficiary, in case
the bid winner fails to deliver the goods or to perform the services
in accordance with the terms and conditions of the contract.
ADVANCE PAYMENT GURATNTEE

 An advance payment guarantee is a guarantee issued in favour of a
buyer who makes the advance upon the request of the seller or the
contractor who received the advance, representing a commitment
on the part of our Bank to repay the sum, in case the seller or the
contractor fails to honour the contract terms in their entirety, or in
part.
 An advance payment guarantee gets proportionally reduced upon
partial delivery of goods or proportional to progress in construction
of projects.
RETENTION GUARANTEE

 Retention guarantees are issued in favour of the party accepting to
release retention money, upon the request of a seller or contractor,
to provide security to a beneficiary, in the event that the seller or the
contractor fails to perform his/her/its obligation as per the terms
and conditions of the contract.
 A retention guarantee arises when a seller or a contractor wishes to
collect any retention held on a contract by presenting a bank
guarantee to beneficiary.
TRADE CREDIT GUARANTEE (TCG)

 TCG is issued to provide security to a local or foreign supplier/
beneficiary on behalf of a local customer (debtor), representing a
commitment on the part of our Bank to meet any claims to be
made by the beneficiary in case the debtor (local buyer) fails to
repay in accordance with the terms and conditions of the sales
contract.
 TCG arise when a local customer enters into a purchase contract
with either a local or a foreign supplier agreeing to repay the
purchase price, usually on an instalment basis over an agreed
period of time.
CUSTOMS DUTY GUARANTEE
 These are guarantees issued in favour of the Customs Authority

(the beneficiary) in respect of customs duties in circumstances
where goods imported without payment of customs duties
(sometimes with the intention of re-exporting) are not re-
exported and the respective customs duties have not been paid.
BG FOR INTERNATIONAL AIR TRANSPORT ASSOCIATION
(IATA) AND OIL COMPANIES
 Letter of guarantee for International Air Transport and Oil

Companies are issued for transaction of revolving nature mostly
to suppliers on behalf of customers.
STEAMERS’ GUARANTEE/LETER OF INDEMNITY FOR
MISSING DOCUMENTS
 These guarantees are issued at the request of the buyer in favour of

a carrier, in circumstances where the bill of lading is missing /
delayed but the goods/cargo/ arrive earlier.
FOREIGN EMPLOYMENT GUARANTEE

 A letter of guarantee issued to MoLSA by the request of foreign
employment agency. No commission is collected from these
customers. The main aim of providing this guarantee is to generate
adequate foreign currency, create access to finance to the
employees, and discharge our social responsibility.
 The applicant shall fulfil all business and legal eligibility criteria
 The applicant shall provide undertaking letter to receive remittance
only through OB.
EDUCATION GUARANTEE
(GUARANTEE FOR CONSUMERS)
 A type of guarantee issued in favour of Ethiopian Revenue Authority

or to any legally recognized institution (Beneficiary) at the request
of the customer to meet any claims to be made by the beneficiary,
in case the customer fails to pay the instalment amount of
education fee (cost sharing).
CONT’D
 The applicant shall present copies of all evidentiary documents to
his/her previous educational achievements,
 A permit from the NBE shall be obtained for any form of guarantee
that the Bank is requested to issue to foreign beneficiaries. This
requirement shall not apply in the case of local guarantee,
 A letter of authorization from the applicant to debit his account to

collect guarantee fees,
CONT’D
 Repayment period for the guarantee commission shall be

determined based on cash flow of the customer or parents/family
of the customers as the case may be. However, maximum
repayment period for the guarantee commission shall be ten
years,
 Education guarantee issued for more than two years,
commission/fees calculated based on the Bank’s Terms and
Tariff and not fully collected at the time of education guarantee
issuance shall bear interest. In this case a customer shall sign
loan contract,
CONT’D
 The applicant shall submit all relevant contractual agreement

made between the beneficiary and the guarantee applicant when
deemed necessary. However, the bank shall not commit itself to
the terms and conditions stated in the contractual agreements,
 Collateral coverage shall at least 200% of the sought guarantee.

GROUP DISCUSSION
 Why the bank provide bank guarantee service to customers?

Describe the benefits of BG to the bank and customer?
 Explain the difference between performance bond guarantee and

advance payment guarantee.
 Explain the benefits of bid bond and retention guarantee for the
customer.
CONT’D
 How TCG support customer’s business. Explain its nature and

benefits to a customer.
 What is the main benefit the bank intends to get by issuing foreign
employment guarantee to customer? Explain its nature and how to
provide this guarantee to a customer.
 For which customer group the bank issue Custom bond guarantee
and guarantee for IATA. Explain.
CONSUMER LOANS
STAFF MORTGAGE LOAN

 A term loan availed to the staffs of OB for construction,
rehabilitation, acquisition, expansion, fence construction or such
works, which add value to residential house. Expansion may include
enlarging the main house or building a service quarter.
 The loan is granted for a maximum period of 25 years depending on

the age of the employee. The financing amount is up a maximum of
95% of the value.
STAFF AUTOMOBILE LOAN
 A type of term loan that is provided to our employees for the

purpose of purchasing of an automobile if the staff offers building
in his/her or spouse name as collateral.
 The loan is granted for a maximum period of 25 years depending

on the age of the employee. The financing amount is up a
maximum of 95% of the value.
STAFF CUNSUMER DURABLE LOAN
 A type of term loan that the bank provides to its employees for the
purpose of purchasing household furniture if the staff offers
building in his/her or spouse name as collateral.
 The loan is granted for a maximum period of 25 years depending

on the age of the employee. The financing amount is up a
maximum of ETB 150,000.00.
STAFF PERSONAL LOAN
 A term loan that the Bank avails to its staffs for purposes other than
mortgage loan, auto, and consumer durable loan if the staff offers
acceptable building in his/her or spouse name as collateral.

the age of the employee. The financing amount is up a maximum of
ETB 300,000.00.
FOR ALL STAFF LOANS
 The applicant must be a permanent employee of the Bank,
 In case of staff mortgage loan, the employee at his/her discretion

can buy loan redemption insurance policy,
 The applicant must have a clean employee record or if the applicant

committed disciplinary offences, he/she shall not be eligible for the
loan until the rehabilitation period of the written reprimand as
stipulated in the HR Policy and Procedure manual,
CONT’D
 The remaining working life/pension period of the employee must

enable him/her to settle the loan at least one year ahead of
retirement day from the Bank,
 The credit request for the loan shall be lodged at the Bank’s
branch nearest to the location of the house to be constructed or
to be purchased or in the case of loan for other purposes, the
branch nearest to the applicant’s residence is preferable. The
branch processes the request and present to the appropriate
committee’s approval.
CONT’D
 The total monthly repayment of the applicant to the bank and/or

other banks or any other monthly payment obligation should not
be more than one half of his/her monthly gross income at any
time. These payments do not, however, include PF contributions
and savings.
 The bank may consider the staff’s spouse income, if the staff’s
income is insufficient to cover the staff consumer loan requested.
The borrowing capacity of the spouse shall be determined by
adding up the net borrowing capacity of the couple.
CONT’D
 The maximum loan to be approved shall not exceed two-fold of

the amount of loan to be granted for the staff on the basis of his/
her salary.
 If the maximum loan amount determined in his way does not
address financial need of the staff and income of the spouse
justifies for further financing, the bank may extend loan to the
extent of paying capacity of the spouse while applying lending
interest rate of (R+5%) on such amount, where R represents
minimum saving interest rate set by NBE.
CONT’D
 The maximum repayment period of the loan shall be determined by considering

the lower of the number of years left for retirement of staff of the Bank or his/
her spouse. The following evidentiary document is required:
Valid marriage certificate
If the spouse of the applicant is an employee, letter from employer specifying:
The spouse is a permanent employee of the organization
His/her age and the number of years left for retirement
Basic salary and list of compulsory debt repayments
Undertaking to notify the bank upon his/her termination of service
Letter confirming that he/she has been paying salary income tax during his/
her employment period in the organization
CONT’D
If the spouse is a businessperson, all pertinent documents required

for business loans shall be presented.
The staff shall sign a letter of commitment to report fair and reliable
figures with regard to his/her marriage partner’s business. Attempt
to exaggerate and misrepresents the true picture of the business
shall entail administrative measures.
The spouse shall be joint borrower and signs the loan contract along
with the staff
The staff shall sign an undertaking to collect and effect the periodic
repayment of the loan on his/her spouse behalf.
CONT’D
 The applicant shall pay the equity contribution of at

least 5% of the cost of building or automobile.
 If the building to be constructed or to be purchased or the already
acquired building is in the name of the applicant’s spouse, the
applicant shall be eligible for the loan provided he/she produces
marriage certificate from authorized organ.
 If the employee, before settlement of the loan wants to sale the
house, he/she should fully settle the loan before release of the
ownership documents. However, the staff could only be eligible for
other forms of loan after
settling the first loan.
CONT’D
 Employees of the bank are eligible to reapply for consumer loans (i.e.
,mortgage, auto, consumer durable and personal loans) as follows:
For mortgage loans: the staff is eligible for mortgage loan after five
years from disbursement date of the first mortgage loan. Also, the
staff shall offer the new building to be purchased or to be
constructed as collateral.
For auto loan: the staff is eligible for auto loan after five years from
disbursement date of the first auto loan. Also, the staff shall offer
the new automobile to be purchased as collateral.
For consumer durable and personal loans: the staff is eligible for
these loans after full settlement of the previous loans.
EMERGENCY STAFF LOAN (ESL)
 Designed to meet the immediate financial needs of the Bank’s

employees under emergency situation.
 It is provided free of interest for a maximum period of three years.
 The financing amount is up a maximum of 6 months of the staff’s

salary.
CONT’D
 Fresh ESL can be granted after the borrower fully settles the
borrowed ESL.
 New ESL shall not, however, be granted to staff who settles the
loan before six months consecutive repayments
 In order to process ESL, ESL format shall be duly filled by
concerned staff,
 If the staff is left with only three years for his/her retirement, the
bank shall not grant any staff loan,
CONT’D
 To be eligible for ESL, a staff needs to be a permanent

employee of the Bank,
 The ESL shall be repaid monthly by deducting from employee’s
salary. If the employee resigns, however, the loan shall be settled
from accumulated PF and/or any benefit due to the leaving
employee and/or monthly from the guarantors’ salary.
HOME LOAN FOR CUSTOMERS

 A term loan extended to individuals that want to build, purchase,
renovate, or expand existing residential buildings or apartments/flat,
and/or to construct fence.
the age of the applicant. For self employed applicant, the maximum
loan period is 10 years. The financing amount is up a maximum 60%
in Finfinne city and its environs.
CONT’D
 The applicant shall be salaried or self-employed with a sufficient
and reliable source of income for the repayment of the loan
 The minimum years in continuous employment/business should
be two years for salaried individuals and 3 years for self-
employed individuals
 The applicant shall present a letter of commitment from the
employer to communicate the Bank when the applicant
terminates his/her employment contract with the organization.
CONT’D
 Equity contribution can be at least 40% to 70% depending on the

location of the building to be purchased or constructed.
 Duration of the loan is for a maximum of 15 years.
 In case of rehabilitation or additional construction, the cost of any
civil work done before his/her application shall be considered as
part of the applicant’s equity contribution as estimated by the
Bank’s collateral valuator.
CONT’D
 Individual member of a Cooperative /Association can be eligible

for the loan provided that he/she could produce individual
ownership certificate.
 In case building purchased or will be constructed through real
estate developers, based on memorandum of understanding
ought to be concluded between the Bank and the concerned
Real Estate Developer, and consent of the customer, proceeds
of the loan shall be directly paid to the Real Estate Developer.
AUTOMOBILE LOAN FOR CUSTOMERS

 The loan is provided for financing acquisition of brand new or
used automobiles with a maximum age of 8 years from the date
of manufacture, solely for non-commercial purpose. Duration of
the loan is 7 years for brand-new and 5 years for used ones. The
financing amount for brand new is 80% of pro forma invoice value
and for used automobiles 70% of purchase price.
CONT’D
 The applicant should be:
A permanent employee of Federal Government or regional state,
public sector,
Undertaking private company or a reputed establishment, who has
a service year of at least two years and with the remaining service
year longer than the required repayment period, or
A professional or self-employed individual who has stayed in
business for at least three years and can produce income tax
return for two years.
AUTOMOBILE LOAN FOR CUSTOMERS
 The net monthly income shall comfortably cover operational costs

of the vehicle and repaying the monthly installments in addition to
personal/family expenses.
 The applicant shall offhand pay the required equity contribution of
20% of total cost for acquiring brand new automobile or 30% for
that of used automobile.
 The applicant shall submit valid pro-forma invoice for brand new
automobile to be purchased, which was issued not later than 60
days,
CONT’D
 For married couples, the income of the spouse may be added if

he/she is a co-borrower to asses repayment capacity and
determine the amount of loan.
 In case of used automobile, confirmation report regarding the
technical fitness shall be submitted from the Bank’s Mechanical
Engineer or any external but appropriate valuator.
 The customer shall offer building as collateral which covers at
least 125% of the loan.
PERSONAL LOAN FOR CUSTOMERS

 Term loans provided for the purpose of covering applicant’s
urgent financial requirements like expenses for domestic or
foreign travel, medical treatment of self or a family member,
meeting any financial liability, or to meeting any kind of
personal expenses. Duration of this loan is 5 years. Maximum
amount of the financing is ETB 500,000.00.
CONT’D
 A resident Ethiopian national capable to repay the loan
 The applicant can be a salaried/business person, professional self-
employed individual like Doctor, Lawyer, Chartered Accountant,
Architect, Engineers, and Management Consultant etc.
 The maximum age of the applicant at loan maturity should be 58
years for salaried individuals and 65 years for professionally self-
employed individuals and business persons.
CONT’D
 The minimum years in continuous employment/business should be

one year for salaried individuals and 3 years for self-employed
individuals before application of loan.
 The income of the spouse may be added, if he/she is a co-borrower
to assess repayment capacity and amount of loan.
 The applicant shall submit valid pro-forma invoice for brand new
automobile to be purchased, which was issued not later than 60
days,
 The customer shall offer building as collateral which covers at least
125% of the loan.
EDUCATION LOAN

 Extended to students desirous of pursuing tertiary/professional/
technical education either in Ethiopia or abroad.
 The parents can become co-borrowers with their dependant
(student), if the latter applies for educational loan.
 Maximum repayment period and minimum equity contribution for
education loan facility shall be ten years and 30% of the total
education cost respectively.
CONT’D
 The applicant must have secured admission to university,

Institution, Professional, or technical course
 The applicant/parents/guardians shall have sufficient and

steady income justifying loan repayment capacity.
FOR EMPLOYEE OF CORPORATE BENEFICIARY (NGO)
MORTGAGE LOAN
 The loan is granted for purchase, construction, rehabilitation,

expansion, or fence construction of residential building. The
financing covers up to 95% of the cost of the residential building.
 It is for a maximum of 25 years depending on the age of the

borrower.
CONT’D
AUTOMOBILE LOAN
 Automobile loan is granted for purchase of brand new or used

automobile only for non-commercial purpose with the oldest
manufacturing year of 2000 G.C.
 The loan is granted for a maximum of 10 years for brand new and
7 years for used automobiles.
CONT’D
PERSONAL LOAN
 The loan is granted for the purpose of covering financial needs of

employees of CORPORATE BENEFICIARY like medical expenses,
travel expenses, purchase of household equipment and furniture,
etc. The loan can be granted for a maximum of 10 years.
NGO EMPLOYEE
 The employee shall have an account with OB;
 The employee shall have clean credit record within the Ethiopian
banking industry;
 The employee shall contribute the required equity contribution for each
type of loan;
 The employee shall have defined and sustainable source of income;
 Spouse income may be considered if appropriate and valid document
such as registration certificate and/or trade license of the organization
where the spouse is earning income is presented and confirmed by the
Branch Manager about its genuineness except government
organizations;
CONT’D
 The employee shall present original title deeds of property offered

as collateral;
 The employee shall provide tax clearance certificate addressed to
OB from concerned government organ;
 The employee shall present brief statement of assets and
liabilities including in the name of spouse;
 The employee shall present proof of marital status;
 The employee shall present valid residence ID card/passport/
driving license;
CONT’D
 The employee shall present two latest passport size photographs;

 The employee shall complete Credit Request Form (CRF) of
consumer loans for Non-staffs;
 The employee could be Ethiopians employed in corporate
beneficiaries;
 The employee including spouses, if any, shall present Tax
Identification Number (TIN);
 The employee shall serve at least one in CORPORATE BENEFICIARY
before requesting a loan;
CONT’D
 The employee shall present letter from the CORPORATE

BENEFICIARY stating his/her basic salary, all deductions from his/
her salary, year of service in the CORPORATE BENEFICIARY,
undertaking letter to notify OB before issuance of clearance
certificate when the employee leaves the CORPORATE
BENEFICIARY;
 Commitment fee is not applicable to all loans in case early payment
or settlement;
 All the loans bear simple interest rate equivalent to minimum saving
deposit interest rate set by the NBE per annum and adjustable when
NBE changes the minimum saving rate;
DIASPORA MORTGAGE LOAN
 A loan provided to build or purchase residential building or for

renovation of existing home in the name of the applicant or
spouse. This loan is for a maximum of 25 years and an applicant
has to contribute 20% of the building cost or purchase value. The
applicant shall either receive the minimum equity contribution of
20% in FCY through our bank or effect the loan instalment
payment in FCY or both.
DIASPORA AUTOMOBILE LOAN
 A loan provided for purchase brand new or used automobile only for
non-commercial purpose. For used automobile the manufacturing
year of the vehicle shall not be more than 15 years. Loan duration is
10 years for brand new and 8 years for used vehicles. If an applicant
provided additional building as collateral, own contribution can be at
least 5% and if there is no additional collateral an applicant has to
contribute at least 20% of the vehicle cost.
DIASPORA PERSONAL AND CONSUMER
DURABLE LOAN
 A loan provided for the purpose of covering urgent financial

needs of the Diaspora or other costs like expenses intended to
cover cost of purchase of household equipment and furniture,
foreign travel expenses, medical treatment of the applicant or a
family member, meeting any financial liability, etc. up to a
maximum of ETB 500,000.00.
DIASPORA LOANS
 The customer shall give his/her consent and willingness in writing
his/her to contribute the required equity amount and/or the loan
instalment payment in foreign currency (USD, Euro and GBP);
 The applicant shall present valid proof of identity card;
 The loan shall be backed by acceptable collateral;
 The applicant may open foreign currency account at one of OB
branch but may not be mandatory;
 The applicant shall indicate his/her source of income on monthly or
yearly basis;
 The applicant shall disclose his/her direct or indirect liability;
CONT’D
 The applicant shall present proof of marital status;

 Married couples can apply for the loan as joint borrowers after
submission of official marriage certificate and source of income,
 The applicant and his/her spouse shall provide tax identification
number (TIN) certificate;
 The applicant shall pay the required fees and charges as per the
prevailing term and tariff of the bank.
 The loan bears simple interest rate equivalent to minimum saving
deposit rate set by NBE plus additional rate which is based on the
applicant’s capability of contributing required amount and
repayment of instalment amount in foreign currency.
DIASPORA BUSINESS LOAN (WORKING CAPITAL)
 A loan provided to support Diaspora to carry out business in Ethiopia

and repayment of the loan is in foreign currency.
 A customer has to ensure the availability of income abroad.
 Working capital loan for Diaspora customers who can repay the loan
in foreign currency shall be handled in line with interest rebate pricing.
DIASPORA BUSINESS LOAN (PROJECT FINANCING)
 A loan provided to support Diaspora to carry out establishment of

new project or expansion of an existing business and repayment of
the loan is in foreign currency.
 A customer has to ensure the availability of income abroad.
 The Diaspora shall either receive the minimum equity contribution of

20% in FCY through our bank or effect the loan instalment payment in
FCY or both.
DIASPORAT BUSINESS LOAN
 Loan repayment shall be in foreign currency (USD, EURO, and GBP)
 The applicant shall provide documents that can indicate about his/
her source of income in foreign currency;
 If the customer starts to repay in local currency, normal interest rate
(rate on local customers) is applied;
 If the customer wants to repay in foreign currency again, interest
rebate procedure applied.
FOR EMPLOYEE OF CORPORATE DEPOSITORS
MORTGAGE LOAN
 A term loan to employees of corporate depositors that want to build

or purchase residential building or apartment or for renovation of
existing home in the name of the applicant or spouse.
 Financing amount is up to a maximum of 95% of the building cost

and loan duration can be up to 25 years depending on the age of the
employee.
CONT’D
AUTOMOBILE LOAN

 A loan for purchase of brand new or used automobile only for non-
commercial purpose. For used automobile, manufacturing year of
the automobile shall not be more than 10 years. Loan duration can
be 7 years if it not backed by additional collateral and 10 years if it is
backed by additional collateral.
 5% of contribution if it backed by additional collateral and 20%
contribution for an applicant if it is not backed by additional
collateral.
CONT’D
PERSONAL LOAN
 A loan granted for the purpose of covering urgent financial needs of
the applicant like expenses intended to cover cost of purchase of
household equipment and furniture, foreign travel expenses,
medical treatment of the applicant or family member, meeting any
financial liability, etc.
 This loan is up to a maximum amount of ETB 500,000.00.

LOAN FOR EMPLOYEES OF CORPORATE DEPOSITORS
 Corporate depositor shall open at least a deposit account at one of
OB branches and maintain a minimum of deposit balance of 150%
of loan under process;
 Corporate depositor shall give written undertaking not to reduce
deposited balance stated above;
 The corporate depositor shall channel all monthly salary and
benefits of its employees through our bank;
 The corporate depositor shall maintain provident fund account of its
employees in our bank, if any;
CONT’D
 OB provides mortgage loan, auto loan, and personal loans to

employees of our corporate depositors;
 Employees of corporate depositors who have defined and

sustainable monthly income are eligible for the loans;
 The applicant shall present valid proof of identity card;
 The loan shall be backed by acceptable collateral;

CONT’D
 The applicant shall open an account in one of our branches;

 The applicant shall present a formal letter from the corporate
depositor stating his/her monthly salary to substantiate the source
of income;
 The corporate beneficiary shall state in the letter stated above that it
shall communicate to bank when the employee terminate his/her
contract with the organization;
 Married couples can apply for the loans. Spouse’s one-third of
income is considered if the spouse is not employee of corporate
beneficiary.
CONT’D
 The applicant shall disclose his/her direct or indirect liability;
 The applicant shall present valid proof of marital status;
 The applicant and his/her spouse shall provide TIN;
 The applicant shall pay required fees and charges as per the
prevailing terms and tariff of our bank.
HOW TO CALCULATE BORROWING CAPACITY OF STAFF AND
OTHER CONSUMER CREDIT REQUESTS
 ..\..\..\..\Personal\Excel\Excel for  ..\..\..\..\Personal\Excel\Excel

simplicity of work\Modified for simplicity of
NGO\Corpempversion1.xlsx work\Empversion1.xlsx
MODEL FARMERS FINANCING LOAN
 Model farmers are considered as defined by the respective regional

government offices and/or as per the list provided by the regional
offices.
 The financing amount is up to a maximum of 80% of the project cost.

Collateral offered for this loan and its valuation is in line with NBE
Directive MCR/02/2020 and the Bank’s MCR procedure issued on
June 22, 2021.
CONT’D
 A customer shall exist in the regional government model farmers

list.
 He/she has to contribute 20% own contribution, present project

feasibility study for project loans, and has to fulfil any relevant
requirement as per the bank’s credit policy and procedure of the
bank.
WAREHOUSE RECEIPT FINANCING

 An instrument in which the bank provides loans and advances for
members and clients of Ethiopia Commodity Exchange (ECX) by pledging
the warehouse receipt issued by ECX to the borrower.
 The customer has to come up with warehouse receipt provided from ECX.
 The customer has to fulfil any relevant requirement as per the bank’s
credit policy and procedure of the bank.
Costs Related to Credit Products
 Mandatory Charges  Optional Charges
• Interest rate • Collateral Release Fee
• Commission • Statement Fee
• Credit Processing Fee • Commitment Fee
• Arrangement Fee
• Estimation Fee
• Stamp duty charge, if
• Credit Information Billing supported by document
• Stamp Duty Charge • Estimation fee (if Cash,
• Revenue Stamp guarantee and the like
• EMCR registration fee offered as collateral)
• Additional interest rate
• Penalty (3%)
CREDIT CASE STUDY
 ..\PPT doc\Case Studies- For Training purpose.

docx
GROUP DISCUSSION
 What do you know about the mistakes/errors committed by lending

branches or credit management in performing credit activities?
Please discuss in group and describe problems of the bank in
providing best customer service related to credit.
 What do you think is borrower’s weaknesses or problems while
requesting for any credit facility from the start of credit request until
repayment of the loan? Please critically discuss in detail and
provide your feedback.
MISTAKES COMMITTED IN CREDIT ACTIVITY
 Information and Documentation

 Providing incomplete information about credit products,
 Not providing checklist of requirement to be fulfilled by the
applicant,
 Failure to collect and retain relevant documents for credit
process and send same to the center like marital/non-marital
certificate, Tax clearance (especially for mortgagors), Business
visit report etc.
 Failure to send a copy of mortgage & loan contract, and
confirmation of collateral registration, and the like to the center.
CONT’D
 Failure to timely send documents for renewal credit facilities

before the expiry date,
 CAF is not properly filled and prepared carelessly.
 Incomplete signature on CAF-Credit Approval Form, (signed only
by 2/1 signatories),
 Absence of latest financial statement, renewed business license
in the loan file etc.,
 Liability is not correctly presented on financial statement
 Failure to send loan & mortgage contract before signing for loan
amount exceeding ETB 1 million to CMLR for review,
CONT’D
 Disbursing loans without obtaining credit review decision from

the district office for BCC approvals,
 Failure to request legal advice on legal persons like PLC, S.C,
partnership,
 Failure to send copy of each export sales contract after
disbursement for follow up purpose,
 Failure to timely send the necessary post approval documents
for guarantee like loan & mortgage contract, confirmation of
collateral registration, insurance endorsement, issued letter of
guarantee and advice for commission.
CONT’D
 CBS-related
 Disbursement made in the wrong economic sector other than the
purpose the loan is provided,
 Setting wrong interest rate,
 Rescheduling loans without collecting accrued interest and
arrangement fee,
 Extend loans beyond the expiry dates,
 Financial Statement related
 Liability is not correctly stated on F/S
 Misrepresentation
 Not up to date and incomplete
CONT’D
 Commission, Fees and charges;

 Failure to collect Credit Processing Fee, Estimation Fee, Credit
Information Billing, Arrangement Fee, Commitment Fee, Statement
Fee, additional interest rate for partially secured loans, EMCR
registration fee,
 Issuing guarantees without collecting commissions or collection
of wrong commissions (wrong rate, day, etc.),
 Not collecting 1% (percent) stamp duty charge,
 Applying wrong interest rate on loan contract as well as on system
CONT’D
 Collateral and Estimation Related

 Not checking and confirming location, physical existence
(minimum requirement) of property offered as collateral,
 Not collecting documents of collateral (TD, Blue print plan) before
valuators come to visit the collateral,
 Estimation fee receipt is not timely sent to collateral valuators,
 Not cooperating with valuators (logistic, fuel),
 Appealing not to send ‘particular engineer’ again to branch for
evaluation (choosing valuators),
 No or minimal collateral visit after disbursement
CONT’D
 Insurance-related
 Insuring collateral properties after effecting disbursement,
 Failure to renew insurance policies on time (Before the expiry date),
 Understating insurance of properties (especially in the case of re-
estimated buildings),
 Wrong insurance policy endorsement i.e. not endorsing OB as a co-
beneficiary on the insurance policy,
 LHC No., Plate No., Chassis, engine number, plate etc. are wrongly
stated on the insurance policies.
CONT’D
 Contracts and collateral registration-related;

 Not preparing and concluding loan contract during the renewal of
OD at increased/decreased limit (prepare and conclude renewal
contract only)
 Disbursing without concluding personal guarantees, if any,
 Preparing loan contracts in compliance with the approval
content i.e. wrong maturity period, loan amount, repayment date,
etc.,
 Preparing loan/mortgage contracts in contrary to decision on
CAF,
CONT’D
 Wrong LHC No., Plate No, chassis and engine number, plate etc.
mentioned on contracts and confirmation of collateral
registration,
 Spouse of the mortgagors not sign on the mortgage contract or
retain power of attorney and get legal advice on it,
 Failure to register the offered collaterals at an increased amount,
 Not affixing revenue stamp on loan and mortgage contracts,
 Witnesses have not signed on loan and mortgage contracts.
CONT’D
 Credit Monitoring and Follow-up

 No follow up on end use of credit facility for intended purpose,
 No follow up of collateral property,
 Weak follow-up for early settlement of due installments,
 Weak O/D accounts utilization follow up,
 Failure to serve reminders as per the procedure,
 No follow up on Foreign Employment Agency for FCY generation,
 Settlement made by LCY for pre-shipment accounts,
 Failure to settle outstanding pre-shipment balance when the exports
proceed came through our bank.
DUE DILIGENCE ASSESSMENT
Tools to undertake KYC with credit applicant:

• The applicant, guarantor, family, etc.
Interview • Eligibility Criteria, Financial Statement,
Experience, Credit history, Business essence.
• Application, CRF
• Relevant supporting documents
Documents •
•
Credit information
Legal advice
• Estimation
• Physically go to the business location

Business Visit • Property offered as collateral
COLLATERALS
 Movable or immovable assets to be offered for collateral shall be

those, which are readily marketable, accessible, and relatively
stable in value, easily transferable, functionally versatile and
insurable
 Immovable Collaterals
 Premises, Buildings and Houses
 Movable Collaterals
 Motor Vehicles
 Merchandise/inventories
 Construction Machinery
CONT’D
 Business Mortgage (Corporeal and incorporeal elements)

 Bank Guarantee
 Deposits in Banks
 Negotiable Instruments
o TB
o Bond
 Account Receivables
 Corporate Guarantee
 Personal Guarantee
CONT’D
 Livestock
 Farm productst
 Land use right
 Financial Instruments
 Intellectual property
 Certified Securities/Share certificates
 Others as per Proclamation No. 1147/2019
DOCUMENT CHECKLIST
 ..\PPT doc\Checklist of required credit

documents.doc
CREDIT APPRAISAL
 Credit Appraisal Process
 Customer’s written application,
 Due Diligence Assessment Report,
 Credit Request Form (CRF),
 Financial statements (CFAR, Provisional Financial Statements or Audited
Financial Statement),
 Business plan/feasibility study,
 Industry related data,
 Supporting documents,
 Credit facilities utilizations performance,
 Credit information report,
 Legal opinion;
CONTENT OF CREDIT APPRAISAL REPORT
 Basic Information on Customer(s)
 Customer’s Full Name
 Spouse Full Name, if any
 Customer’s Credit Risk Rate
 Tax identification Number
 Address
 Business Type
 Economic Sector
 Type of Financial Statement Presented
 Date of Establishment of the Business
 Date of Establishment of Relationship with the Bank
CONT’D
 Customer’s Request
 Credit Exposure and Loan Account Performance
 Financial Statement Analysis
 Competence and Character of Management
 Key Customer and Suppliers of the Business
 Appraisal of Project financing
 Business Plan/Feasibility Study
 Property offered as collateral
 Strength and Opportunity
 Weakness and Threat
 Recommendation(s)
CREDIT RISK RATING
 Credit Risk means the potential loss to the Bank when its borrower fails
to meet its obligation in accordance with the agreed terms and
conditions.
 Credit Risk Rating means a system employed by the Bank to measure
the exposure of credit risk of the credit facilities to specific borrower.
 Purpose of the Rating is to:
 Properly manage credit risk of individual borrowers,
 Assist credit decision making process,
 Help in monitoring and controlling the quality of loans and advances,
 Maintain application of uniform credit risk rating decision,
 Help in setting loan pricing and maintain appropriate level of loan
provisioning.
BUSINESS STRENGTH (FIRST WAY-OUT) 100%
 Character and Relationship Risk (25%)

 Account performance (7.5%)
 Relationship with Bank (s) (7.5%)
 Character (10%)
 Financial Risk (25%)
 Ratio analysis
 Quality of Financial Statement
 Business/Industry Risk (20%)
 Management Risk (15%)
 Ownership Risk (15%)
• ..\PPT doc\Measurement.docx
STANDARD RATING FOR BUSINESS STRENGTH (100%)
Scoring Interval Rating

85% < X < 100% Prime
68% < X < 85% Acceptable
50% < X < 68% Watch-list
35% < X < 50% Doubtful
Below 35% Loss
STANDARD RATING FOR SECURITY STRENGTH (100%)
 Major discrepancy, deduct 20%

 Minor discrepancy, deduct 5%
 Then consider collateral estimation as indicated below.
Parameter (%) Score
>110 100
102 to 109.99 95
95 to 101.9 85
75 to 94.99 75
50 to 74.99 50
Below 50 25
STANDARD RATING SCALE FOR COLLATERAL/SECURITY
STRENGTH
Scoring Interval Rating

> 95 Strongly Secured
85 to 94.99 Fully Secured
75 to 84.99 Partially Secured with Moderate Risk
50 to 74.99 Partially Secured with High Risk
Below 50 Unsecured
CREDIT RISK RATING MATRIX
Collateral/Security Borrower’s Business Strength

Strength Prime Acceptable Watch-List Doubtful Loss
Strongly Secured AAA AA A B B-
Fully Secured AA A BBB B- CCC
Partially Secured
A BBB BB CCC CC
with Moderate Risk
Partially secured
BBB BB CCC CC C
with High Risk
Unsecured BB CCC CC C D
INTERNAL CREDIT RISK RATING/GRADING
INTERPRETATION
Bankable Not-Bankable
 AAA, Exceptionally Low Risk  B, High Risk
 AA, Very Low Risk  B-, Very High Risk
 A, Low Risk  CCC, Extremely High Risk
 BBB, Acceptable Risk  CC, Default Risk
 BB, Moderate Risk  C, Default Risk
 D, Default Risk
• ..\..\..\..\Training Module on CREDIT MGT\Annexure\Business Visit.
doc..
• \..\..\..\Training Module on CREDIT MGT\Annexure\CFAR.doc
• ..\..\..\..\Training Module on CREDIT MGT\Annexure\CRF-AM.doc
• ..\..\..\..\Training Module on CREDIT MGT\Annexure\CRF-Eng.doc
CREDIT APPAISAL CASE STUDY
..\PPT doc\Case Studies- For Training purpose.

docx
SAMPLE CREDIT APPRAISAL
..\PPT doc\Sample Appraisal.docx

STANDARDIZED CAF – CREDIT APPROVAL FORM
 Confidential
 CAF No.; Date; Branch; TIN, and License No.
1. Name of Applicant: ____________________________
2. Type of Business: _____________________________
3. Customer’s Credit Risk Grade: ____________________
4. Current Request: ______________________________
5. Purpose: ____________________________________
6. Present Loans and Credit Facilities with OB
CAF – CREDIT APPROVAL FORM
7. Collateral
8. Branch’s Declaration of Fulfilment of all Formalities
9. Decision of the Branch Credit Committee.
10. Recommendation of ……………. at Credit Management /District

Office/Credit Monitoring and Loan Recovery.
11. Decision of --------------- Credit Committee (Give reasons for declining)

..\PPT doc\CAF and its explanation New\CAF-
standardized2.doc
..\PPT doc\CAF and its explanation
New\Explanations to CAF.doc
ATTACHMENTS TO CAF
 Document check list (tick all available documents)

 CAR (two copies). This is annex to CAF
 CRR (two copies)
 BVTR
 CRF
 Credit application of a customer
 Trade license/Investment license
 Principal registration
 TIN
CONT’D
 Marriage certificate or non marital status-up-to-date

 Credit Information (not later than 3 months)
 Financial statement (Audited or Provisional or CFAR)
 Tax clearance
 Collateral valuation report
 Memorandum and Article of Association
 Business Plan/Feasibility study
 Power of attorney with legal advice
CONT’D
 Pro forma Invoice (latest)

 Land holding certificate (LHC) or title deed
 Booklet (‘Libre’)
 Land tax payment receipt
 Lease agreement
 Other documents depending on type and nature of the loan
CONT’D
 Attach with fastener or scan and send soft copy
 Send to District Office or Credit Management depending on DLL of

the units.
 For credits approved at branch – send to your respective District

Office for review before disbursement of a loan
 Send copy of the above listed documents
 No need of sending in two copies

CREDIT DECISION MAKING
 Credit Approving Committees

 EMCC - Executive Management Committee (all Conv. and IFB
products)
• Credit request beyond MCC limit up to single borrower limit,
• Credit request of related parties,
• NPL resolution decision which initially approved by MCC,
• Appeal cases initially approved by MCC,
• OD over-drawal request (25% of regular OD facility
• ..\PPT doc\Related party explanation.docx
CONT’D
 MCC - Management Credit Committee (all Conventional and IFB

products)
• Credit request beyond DPCC limit up to Birr 40 million,
• NPL resolution decision which initially approved by DPCC,
• Appeal cases initially approved by DPCC
 DPCC - Department Credit Committee (Conv. + IFB)
• Credit requests beyond DCC limit up to Birr 15 million,
• Collateral to loan ratio shall be at least 100%
• NPL resolution decision which initially approved by DCC,
CONT’D
• Appeal cases initially approved by DCC

• Supplier change request initially approved by EMCC and MCC
(with same quality, quantity, brand, and price (low price is Ok.)
• Handle cases of Tepi, Mizan Aman, Bonga, Dessie District
 DCC - District Credit Committee
• Credit request beyond BCC limit up to Birr 5 million,
• Collateral to loan ratio shall be at least 115%
• Guarantee facility request beyond BCC limit up to Birr 10 million,
CONT’D
• Collateral to loan ratio shall be at least 90% (For bank

guarantee)
• NPL resolution decision which initially approved by BCC,
• Appeal cases initially approved by BCC
• DCC is not empowered to decide on export, project finance,
consumer loan product of non-staffs
• Review credit requests approved by BCC, except Dessie District
Office.
CONT’D
 BCC – Branch Credit Committee

• Credit request up to 1 million (City branches),
• Credit request up to 500,000 (Outlying branches, except some
branches),
• Collateral to loan ratio shall be at least 115%,
• Only working capital of existing business,
• Not empowered to decide of initial (new business) working
capital credit request,
• Loan tenure shall be 24 months,
CONT’D
• Guarantee facility request up to Birr 3 million,
• Collateral to loan ratio shall be at least 100% (For bank

guarantee),
• Decide and issue bank guarantee facility request fully backed

by cash collateral, after fulfilling all credit requirements; send
those that not fully backed by cash to DCC/CM,
• Form BCC committee and get approval from the CEO before
commencing BCC’s DLL,
IMPLEMENTATION OF CREDIT DECISION
 Communicate to Customer,  Disbursement,

 Handle appeal, if any,  Documentation and Filing,
 Contract preparation and  File pruning,
signing,
 Send documents to CMD
 Collection of fees and charges
 Renewal of insurance
 Insurance
 Credit Monitoring
 Registration
 Collection of Loans
CREDIT ACTIVITY WORKFLOWS
CREDIT WORK PROCESS (DETAIL)
Provide information to
applicant Financial pre-assessment
Collecting checking Estimating values of

documents collateral property
Business visit (site visit Checking report on collateral

at client) property valuation
Preparing due diligence Inquiring credit information

report
The following activities Legal advice

will be undertaken
CONT’D
Revising customers risk Designing or preparing loan and

rating and mortgage contract
recommendation
Disbursemen
t
Presentation to Credit Getting collateral insured
Committee
Filing of
Signing of loan/mortgage
Reviewing loan proposal by contract documents
approving team
Getting loan/mortgage contracts

registered and checking the This credit
Deciding on loan proposals appropriateness activity takes
21-28 days.
Checking completeness of the
Communicating credit credit file and the data entered in
decision to branch and the CBS or in the loan module
customer
POST – DISBURSEMENT
Contacting the client and Purpose of Post-

scheduling an appointment
Disbursement Monitoring
Business visit  Ensure the fund is used as per

the loan request
Record (photos,
supporting documents)  Monitoring of the business
fund utilization
activity
4. Filing of supporting  Monitoring of the collateral
documents
BUSINESS/COLLATERAL/INSURANCE MONITORING
WORKFLOW
Scheduling a visit with the client

 This takes 4.52 days to
Site visit at client
complete the assignment
Collecting and checking
financial documents
Insurance renewal
Filing of the monitoring

report
LOAN COLLECTION FOLLOW UP WORKFLOW
(2.625 DAYS
Record (photos,
supporting documents)
Contacting the client, gathered,
Filing of supporting
Contacting the client documents,
when the payment is <15
days pas due, client visit,
Issuing the notice per
Annex 9-FRLC
Issuing the notice per
annex 8- FRLC (First Contacting the client
reminder), when the payment is >30
days pas due, client visit
Resolution mechanism-
Contacting the client when the payment is over 60
the payment is <30 days days pas due, but <90
pas due, client visit, days pas due.
NPL MANAGEMENT, >=90 DAYS PAS DUE
Put loan on non accrual

status, Foreclosure/Litigation
process
Update client file with the
relevant actions taken ,
prepare summary report,
The client file is
transferred to the loan Loan write off
recovery committee,
Loan recovery proposal, This takes 5.5 days

to complete the
activity.
Draw up an action plan,
negotiation process,
PORTFOLIO MANAGEMENT AND REPORTING
WORKFLOW
The list of
Obtain data from the specifications should include at least:
system facility-related: loan number, branch, LO code,
area/district
Producing standard product-related: product type (s), economic
reporting (CIDD) sector, term, purpose, currency, interest rate, co-
Loan classification and
financing/down-payment, fees, disbursement
Producing standard loan provisioning
and loan closure date, number/periodicity of
reporting (Asset (CMLRM) repayment, collateral type, collateral value, date
Management & Logistics of reassessment, special conditions;
Division)
client-related: identification number (personal,
Reporting to NBE business), name, contact details, borrower’s
(RMCD) status, selected financial data/necessary criteria
for financial analysis and reporting, date of
Loan classification and reassessment, product and repayment
loan provisioning characteristics/credit history (late repayment
(CMLRM) history), etc.,
THANK YOU
The Bank of Your Frist Choice
Serve: Superior Customer Experience
Empower: The Missing Middle
Inspire: People to grow with greater

confidence, persistence, endurance
and tenacity.
FOR ANY ENQUIREY, DO NOT HESITATE TO CONTACT ME
WITH BELOW ADDRESS
Melkamu Asebe Jeldu
melkamuaj@gmail. +251 11558 6462

com +251 911 360137

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CREDIT PRODUCTS,

CREDIT OPERATION CREDIT PROCESS AND

Credit Products,  CAF and its attachments,

 Questions and Comments

 Self Assessment Test

• Employees • Customers • Shareholders

In general, OB’s vision statement stipulates that the Bank strives

 The important parts mission statement are:

 Social Responsibility: Acts in a way that encourages positive

We value persistence, OB ﬁrmly dedicate our resources towards

We value customer OB put customers’ satisfaction ﬁrst, as it is the

We value respect OB has due respect for all stakeholders

 Term Loans  Overdraft Credit Facility

 Any credit applicant needs to open either checking or saving

 The applicant has to present all the documents/ information

Deﬁnitions, Nature and Features

Deﬁnitions, Nature and Features

Deﬁnitions, Nature and Features

 A detailed study of the capital investment project (Project

 The applicant shall offer the entire assets of the project as

 The project shall be ﬁnancially feasible.

Deﬁnitions, Nature and Features

 A detailed study of the capital investment project (Project

 The applicant shall offer the entire assets of the project as

 The project shall be ﬁnancially feasible.

Deﬁnitions, Nature and Features

 The loan could also be extended to other business sectors as

 Equity contribution shall be at least 30% of purchase value the

 If an applicant contributes more than 40% of purchase value, the

Deﬁnitions, Nature and Features

 A construction machinery loan is a loan extended to our customers

 The construction machinery shall only be new brand.

 Equity contribution shall be at least 30% of purchase value of the

 The amount of the equity contribution shall, however, be

Deﬁnitions, Nature and Features

 Eligibility may depend on the nature of a loan requested.

 When other banks invite OB for co-ﬁnancing the following issues

Deﬁnitions, Nature and Features

Deﬁnitions, Nature and Features

 Real estate development loan is a term loan granted to real estate

Deﬁnitions, Nature and Features

 Consulting ﬁrm ﬁnancing loan is a form of short-term loan extended

 Valid professional license from the concerned government body.

 Up to date ﬁnancial statements (Audited or provisional) including

 Contract justifying the existence of the business at hand.

Deﬁnitions, Nature and Features

 We extend credit to the MFIs for their on-lending purpose to

Deﬁnitions, Nature and Features

 The loan can be granted for the purpose of supporting

a) The applicant shall present an Intellectual Property Right

b) The applicant shall present valid investment or business license.

c) The applicant shall submit feasibility study.

Deﬁnitions, Nature and Features

Deﬁnitions, Nature and Features

 Small-scale enterprises are those businesses with a paid-up

 Small-Scale Enterprises that could obtain a credit-guarantee

 A customer came to Oromia Bank Branch and explained about his

Deﬁnitions, Nature and Features

The Over-drawal’s of Overdraft Credit Facility amount should be

Seasonal or temporary ﬁnancial needs should not be entertained

OD classiﬁcation as per NBE directive SBB/069/2018.

Deﬁnitions, Nature and Features

 The facility is granted when huge amount of working capital fund is

 MCF can be one time or revolving/Renewable.