ADFIAP, through its service unit, ADFIAP Consulting (AC) visited FSMDB for the re-establishment of its Credit Scoring tool.\u00a0 The objective of the consultancy project is to provide guidelines for the basic evaluation of all credit applications\/loan proposals to ensure that all details of the borrower\u2019s personal entrepreneurial profile and business operations are properly assessed, evaluated, and risk-rated.\u00a0 This will enhance the predictability and probability of loan repayments thus ensuring the operational sustainability of the Bank in the long-term.<\/p>\n
The engagement is comprised of various phases from desk research on FSMDB\u2019s Lending Policies and Operations; review of the efficacy of the previous credit scoring system, loan portfolio, and product segmentation; on-site visit and validation of initial outputs through interviews of key persons, up to the development and Management approval of the enhanced Credit Scoring Tool.\u00a0 An online orientation training will also be provided to FSMDB\u2019s Head Office and Branch staff involved in lending activities on the proper implementation of the Credit Scoring\u00a0 (CS) Tool.<\/p>\n
Upon completion of the desk research and review phases, an on-site visit at the FSMDB Headquarters in Pohnpei, Micronesia was held from February 16-26, 2024 by\u00a0 Mr. Victor Abainza, Senior Consultant and\u00a0\u00a0 Ms.\u00a0 Carmen Cintura, Lead Consultant for Financial Management, Audit and Compliance.\u00a0 On-site visit activities included:\u00a0 (1)\u00a0\u00a0 validation interviews with\u00a0 credit officers; (2) initial revision of the proposed CS Tool based on validation interviews;\u00a0 (3) meetings with the Information Technology\u00a0 team\u00a0 on the required IT work to be done such as\u00a0 the ability to translate\u00a0 the excel-based program into the Bank\u2019s current system with appropriate control features, system specifications, user access controls, authorization, digital signature, multiple users and reporting of transactions; (4) meetings with the Finance Officers;\u00a0 (5) presentation of the\u00a0 proposed Credit Scoring Tool to the Technical Working Group;\u00a0 (6) pre-testing of the excel spreadsheet application\u00a0 for the consumer, housing and commercial\u00a0 loan accounts using both current and past due accounts and debugging\u00a0 of the spreadsheet application; (7) inputting of selected accounts into the credit scoring spreadsheet and monitoring the processing time under normal circumstances; (8) calibration of the weights for the parameters and performance measures for each loan type based on the preliminary test data; (9) Wrap up meeting with the Technical Working Group\u00a0 on the activities completed, results of the testing, further enhancements to be undertaken and the IT requirements.<\/p>\n
Further review of the specification of the developed Credit Scoring\u00a0 Tool by AC\u00a0 will be done to ensure that the stipulated outputs and revision requirements of FSMDB are met.\u00a0 Upon completion of the automated Credit Scoring Tool,\u00a0 the Technical Working Group shall finalize the Credit Scoring Tool Specs and present the same to the FSMDB Management for final approval.\u00a0 To address the capacity empowerment objective, the online orientation as mentioned above will thereafter commence.\u00a0 AC shall perform extended monitoring of the Credit Scoring System within 1 year from sign-off to ensure its efficiency and predictive capabilities and provide fine-tuning as part of ADFIAP\u2019s unique value proposition.<\/p>\n
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