This document discusses strategies for managing delinquent loan accounts, including: 1. Classifying accounts based on borrowers' capacity and willingness to pay, with legal remedies pursued for those unwilling but able. 2. Writing off accounts deemed uncollectible that are over 90 days past due and lack capacity to pay. 3. Using websites, blogs, social media and SMS to promote recovery of written-off accounts.

1. Management of Hardcore Delinquent
Accounts
Jennifer S. Sabianan
Microfinance Specialist for Luzon, MABS
2010 RBAP‐MABS Regional Roundtable Conference
Pan Pacific Hotel, Malate, Manila
November 23, 2010

2. 100%
89%
90%
80%
70%
60%
50%
40%
30%
20%
11% 10% 8%
10% 7% 6%
0%
Current PAR 1 day PAR 7 days PAR 30 days PAR 60 PAR 90 days
days

3. 1 to 7
9.58% 6.08%
8 to 14
10.37% 15 to 30
55.18%
11.62%
31 to 60
8.12%
61 to 90
Above
90

4. • PAR level is way below of the standard.
• The accounts are hardening up as they age.
• The bulk of the PAR problem are accounts that are
already been past due/overdue for more than 90
days . The banks should take immediate and serious
acMon to address and lower down delinquency.

5. Classify Accounts as to Probability of Collection
Capacity to Pay Willingness to Pay
Pursue collection
With capacity Willing to pay
Seek for legal remedies
With capacity Not willing to pay
Write Off for the accounts who don’t have the capacity to
pay.

6. • Defini@on
– Taking out a loan account from the bank’s
ac5ve por8olio and classifying them as wri<en
off, to determine the type of collec5on effort
and steps that the lender could pursue later.
– It is an accoun5ng func5on where a wri<en off
account is classified from ac5ve to bad debts
wri<en off;

7. 1. To prevent the build up of
worthless assets in your portfolio;
2. Allows your key people (account
officers) to focus on the
generation and management of
quality accounts;
3. Flexibility in payment
arrangement

8.  Balance Sheet
– Cleanses and improves the portfolio quality;
 Income Statement
– Helps reduce the bank’s tax liability;
– Written-off accounts when collected turns into
income.
 The bank has more options in the recovery of its
bad accounts. A unit can focus on the recovery of
written off accounts.

9. • Overdue for more than 90 days
• Accounts deemed uncollecMble
‐ Classify as to probability of collecMon
* Borrowers that have no capacity to pay
For borrowers that have capacity to pay, but are not
willing, seek a legal remedy through the Small
Claims Court System in the MTCs.

10. • Websites
– www.rbapmabs.org
– www.mobilephonebanking.rbap.org
• Blogs
– hTp://www.rbapmabs.org/blog/
– hTp://blog.mobilephonebanking.rbap.org/
• RSS Feeds

11. • Other Portals
– Facebook ‐ hTp://www.facebook.com/rbapmabs.org
– TwiTer ‐ hTp://twiTer.com/rbapmabs
– YouTube ‐ hTp://www.youtube.com/johnvowens
– Flickr ‐ hTp://www.flickr.com/photos/rbapmabs
• SMS Gateway