loan application form

C. Internal Audit

 Please describe your internal audit (IA) function in detail below. Please be sure to cover the following issues:

o Number of employees in the IA unit

o Reporting lines – To whom does IA report

o How frequently does IA visit each branch

o Summary of audit procedures

o Key areas reviewed

D. External Audit

 Please note in the space below the name of your external auditor, the date of your last audit and any significant issues presented in your last audit. If your institution has not been audited, please detail the reasons why the institution has not been audited and when it will be audited. Please be sure to include audited financial statements for the last three years (where available).

 How long have you been using your current External Auditor?

 What is the selection process used for hiring an External Auditor?

 Could Deutsche Bank contact your External Auditor? If so, please provide contact information:

E. Regulatory Environment

 Who is your primary regulator, if any?

 If you are regulated, what was the date of your last visit? Were there any outstanding issues?

 How many weeks does the regulator spend at your institution on an annual basis?

 In the event that you are not regulated, do you have any plans for transformation?

 Are there any pending legal changes? If so, what impact would they have on your organization?

F. External Rating

 Is your institution regularly rated by an external entity?

YES NO

 If so, please provide the name of the rating agency below and discuss any significant issues. Please provide a copy of the rating report in your loan application submission.

 How long have you been using your current external rating company?

 What are the criteria used in the selection process used for hiring the rating agency?

V. Credit Risk Management

A. Underwriting Process

 Please describe the MFI’s principal approach/ methodologies (group/individual/other). If the organization has credit policies and procedures manual, please attach a copy to the application.

 Please check all general criteria that the MFI uses to evaluate microfinance borrowers.

Criteria Place “X”

Assessment of Character

Capacity to Repay / Cash Flow

Collateral / Guarantee

Capital Accumulated

Required Borrower Training

Savings Account Linked to Loan

Membership in a Group

Pre-Existing Business

Use of Funds

Location of Borrower

Other (Specify)

 When were the policies and procedures last up dated?

 What steps are necessary to approve credit changes and how are these changes communicated to loan officers?

 Are compulsory savings or shares required to receive a loan?

YES NO

 If so, how does loan size relate to the compulsory savings?

 What is the maximum and minimum that you can loan to one person or group of people?

Maximum Minimum

 Do loan officer’s or a third party evaluate the guarantees for the loans?

Loan Officer Third Party

 Does it vary by size of loan? Please describe below

YES NO

 Do you require collateral for all loans?

YES NO

 If no, under what circumstances do you not require collateral?

 What is the loan-to-value (LTV) that the guarantee must have for each type of loan:

Chattel Home Office Building Other

 Do you require the client to have insurance on collateral?

YES NO

 Please describe your loan approval hierarchy. Please note that the hierarchy below is only suggested. Please add or subtract where appropriate.

Authorized Amount/Situation

Branch Loan Officer

Branch Manager

Branch Credit Committee

Regional Loan Officer

Head Office Loan Officer

General Manager

Head Office Credit Committee

Board of Directors or Member of Board

 What percentage of your institution’s gross loan portfolio is comprised of loans with bullet maturities? Please also describe whether it is interest and principal and/or principal only.

 Does your institution have policies that limit its top ten loan concentration (i.e. limits on how much of the portfolio can be concentrated in the top ten largest loans)?

 Does your MFI have policies that limit loans to company insiders (i.e. employees and Board members)?

B. Collection Process

 How many days after a payment is missed is it considered to be past due or delinquent?

 Is the entire loan balance included in the delinquency calculation or just the amount of payment that is late?

Entire Balance Payment Past Due

 Please describe below (or reference section and page number of credit policy/procedure), the procedures to assure timely collection of amounts falling due. Please be sure to include

o Timing and description of verbal and written reminders and/or notices

o Timing and success rate of collecting against guarantors

o Timing and description of legal collection efforts

 Does the MFI use a third-party collection service?

YES NO

 If so, under what circumstances are the loans given to the third-party collectors, and what portion of delinquent loans are generally recovered by collectors?

 When a loan falls delinquent, do you charge clients a penalty?

YES NO

 If a delinquent penalty charge is applied, how is it calculated?

 How many internal and external lawyers do you have working on collection efforts?

C. Loan Loss Reserves, Charge-Offs and Recovery

 Please describe MFI’s policies and procedures for creating loan loss reserves for past-due loans. We understand that this may vary by product, so please provide for primary loan products. Where possible, please provide in table format as in the example below:

Product Name

Days Past Due Loan Loss Reserve as a % of Loan

0-15 Days 5%

15-30 Days 10%

etc.

 Is collateral considered in the creation of the MFI’s loan loss reserves?

YES NO

 If collateral is considered, please describe the process.