Case study Planters Development Bank
This case explains how the Planters Development Bank, CICADA (Canada International Development Association, ACES (Agency for Community Educational Services), SAFE (Channel- Austin Foundation In Infant), CASABA (Nag Social Action Center of the Archdiocese of Uneven Cares In Cameramen Sure) and LEFT (Letter Economic Foundation, Incorporated) worked together In order to provide Seems needs especially for the agriculture industry specifically for farms and farmers as stated in the case.
The parties involved have each contribution. Other said parties also play a vital role cause of balancing the funds and referrals as well. But transactions and legalities were done through Planters Development Bank. Problem and issues among parties occurred when Seems or farmers were not capable enough to pay the loans they applied from Planters Development Bank which was financed by CICADA.
The incapability of Seems or farmers resulted to complications among the Bank, No’s involve and the Seems or farmers which were the problem we think as a consultant of Planters Development Bank because the financial aspect makes every party beneficial and crucial but suddenly became hard for each party because the Seems Incapability o pay the loan principal and Interests which results to slow fund revolving and may result for the program to stop.
L. Statement of the Problem Profitability for the bank and sustainability for the farmers. II.
Objectives Short-term: * To make settlements and solutions regarding loans and interest rates. Long-term: * Create a fair program loans for Seems. * Determine what other solutions may be done to resolve each of the parties concern.
Ill. Areas of Consideration * “I found out that we had a tremendous Impact on our clientele. We were a small bank so we were necessarily dealing with small businessmen and entrepreneurs. These were borrowers who were not getting the right credit opportunities, and there we were finally giving them access to formal credit sources..
. Began to see other possibilities and became a little more inspired” stated Jesus Taunting, President of Planters Development Bank. * CICADA (Canada International Development Association) noted two unusual aspects to the program in their Mission Report: “This is the first time the Bank has blended grant money into its loan portfolio. The Agricultural Credit Policy Council (CAP) and the Department of Agriculture are keenly interested in the results of this scheme..
. This is one of the rare occasions Mangos are dealing with a bank.
There is general resistance to interest rates even if what the scheme offers is way below market rates. ” * Carbon “Dinky” Solomon, Chairperson of the Board of Trustees of ACES, wrote to Angels informing her two problems that had arisen In their relenting operations: “There were farmers outside the ACES area of operations who were able to avail of loans. This was not agreed upon by our Executive Committee.
.. There was improper recording of transactions, and in some instances, some supporting documents to explain certain loans given out, were lacking. IV. Alternative Courses of Action 1 .
Planters Development Bank should require collateral to ensure security, lessen the interest rate by 5% and must practice a strict credit investigation and payment terms due dates. Vision We help fulfill the dreams of Filipino Seems, their families and their communities. Mission We are the total bank for Seems. We customize our products and services to the needs of our chosen market. We are proud of our developmental role that we go out of our way to live it.
Our clients are happy with us that they link us up with potential clients, other entrepreneurs and their business partners. Our people are high reforming and passionate about their Jobs. Our stakeholders are proud to realize their development mission and are rewarded by increased shareholder value. We strive to be responsible stewards of the environment. We contribute to the growth of the communities we serve and assist in poverty alleviation and nation building.
SOOT Analysts Strength * The borrowers will be able to pay on time due to the low interest rate borrowers will be able to acquire loans * Secured assets because of the required collateral * Capable and credible farmers that will pay as expected Weakness * Lesser profit due to lower interest rate by 5% Opportunity More * It will attract more borrowers to loan Increase of affiliates Acquire and merge with small time rural banks Branch expansion Increase in market/clients either for SEEM and consumer loans Threats Borrowers with bad intentions will take advantage Other banks are into SEEM assistance offering low interest rates * Larger banks offer greater compensation packages to skilful and experienced employees * Growth and presence of more banks and private/non-banking companies -insurance, pawnshops, cooperative and financing offices; logistics * Variation of interest rates among banks * Back-to-back loans * Unstable exchange rate Unstable political status conversion: -rows I Weakness: * Lesser profit due to lower interest rate by 5% | Strength: * Compensate the low rate by the volume of borrowers I Threats: * Borrowers with bad intentions will take advantage I Opportunities: * Programs will be made for Dowers Intend Advantages EAI Intention I * It will attract more clients that will be interested because of low interest rate.
Long term relationship can retain clients due to considerable lower interest rate. Disadvantages * If they will not pursue the plan of lessening the interest rate the prospective clients will choose other loans from other sources. Lowering the interest rate will lessen the profit.
Action Plan: Policy * 9% per annum fixed interest rate * Flexible collateral requirements on either full, partial or clean basis. Programs * Crop insurance to be secured borne by the borrower. * Guarantee cover by GAFFES or the PDP-FM guarantee facilities.
* Sureties/ASS Anoint and severally secured) to the loan funds were to be secured by each MONGO. System * PDP should maintain their interest rate by 9% * PDP should maintain proper credit investigation and payment terms Procedure * PDP must practice a strict credit investigation * PDP should be strict in terms of paying due dates PDP would require collateral to its borrower Rules and Budgets 1 .