Medium to Large Scale Lending and Financing Cycle

The Palestinian Banking Corporation is employing a fleet of field Loan Officers (LOs) distributed allover the cities and villages of Palestine. The corporation has developed an effective lending and monitoring system managed by a team of qualified experts. The system is divided into 10 stages:

1. First Contact with Potential Clients: The first contact usually takes place either by receiving clients in PBC’s offices or by approaching them through the regular and systematic field visits organized by the LOs. It must be emphasized that the dynamic marketing approach of PBC is to visit systematically projects. At this stage the LO evaluates whether the project is in line with PBC’s policies.
   
   
2. Submission and Collection of Project Documents: At this stage, borrowers are invited to proceed to second stage. Each applicant is now required to:
   • Prepare a feasibility study for large size projects and a description report for small ones.
   • Complete the application form.
   • Prepare the applicable documents related to the project such as: License, registration, insurance policy, documents of the proposed loan guarantee, balance sheet, bank statements, price offers, and catalogues.
   
   
3. Valuing Financing and Credit Eligibility: Upon receiving the required papers and documents mentioned above, the LO prepares the file and evaluates the project. Eligibility of financing and credit is assessed in the light of:
   • Credibility and credit history of the borrower(s).
   • Feasibility of the project, including financial soundness and economic viability.
   • Quality and amount of the collateral proposed.
   • Project development impact.
   
   
4. Field Investigations: Field investigations are purposely planned and conducted at this stage by the LO. In addition, if needed, by the Corporate Banking Manager or his deputy in order to test the accuracy of the information collected and to ensure:
   • The viability and feasibility of the project and the actual purpose of the loan.
   • The value of the proposed collateral.
   • Gathering facts about the borrower(s) and guarantors.
   • Making the necessary consultations with the borrower concerning loan amount, duration, cash flow etc.
   • Consulting with concerned parties like other lenders, suppliers, project consultants, and/or administration officials.
   
   
5. Loan Officer Recommendation: Having collected and evaluated the relevant information and document papers, the Loan Officer makes his final recommendations which include:
   • Loan amount and purpose
   • Loan period.
   • Grace period.
   • Payment method.
   • Collateral.
   • Any other conditions.
   
   
6. Corporate Banking Department Recommendation: In the light of the above actions, the LO transfers the recommended application to the Deputy Corporate Banking Manager and Corporate Banking Manager. The Deputy Corporate Banking Manager and Corporate Banking Manger study the files submitted to them and make their recommendations.
   
7. Investment and Credit Department Recommendation: In the case of special projects, loan syndications and large loan amounts, projects are transferred to the Investment and Credit Officer Evaluation. The Investment and Credit Officer conducts detailed financial, economic and technical valuation and makes his recommendations to the General Manager.
   
   
8. Loan Approval: There are two loan approval committees:
   • Projects Committee for loans less than $100,000: These loans are approved by the Management Committee which is headed by the General Manager and composed of the Corporate Banking Manager and the Loan Administration Manager.
   • Board of Directors Committee for loans more than $100,000: These loans are submitted to the Projects Committee that makes recommendations, and then refers to the Board of Directors Committee (composed of members of the Board of Directors and General Manager) for final decision.
   
   
9. Loan Disbursement: Once a decision is made, the LO receives the committee decision in writing. A written decision is then sent to each borrower. In case of approved project, detailed terms and conditions including a draw down deadline date are provided.
   
   
10. Signing Loan Agreement: The concerned LO in addition to the lawyer, in coordination with the Loan Administration Department, assist the borrower to prepare the collateral and other requirements as defined in the loan decision. Upon compliance with the conditions of a loan, the loan administration and legal departments prepares the loan closing documents, including the loan agreement, the promissory notes and the first payment of the loan.
    
    
11. Loan Servicing and Collection: To minimize project operating and financing risk, certain measures and actions are taken to protect the loan portfolio. These measures includes but are not limited to:
    • Activities to ensure the implementation of the loan decision.
    • Weekly review of the stage of implementation of each loan.
    • Activities to ensure repayments on due dates.
    • Monthly notes to each LO covering all of the due installments in his portfolio.
    • Regular site visits.
    • Regular reports.
    • Monthly loan classification.
    • Annual financial reports.
    • Direct action in case of payment delay, if deemed necessary.
    
    
12. Loan Administration: Files and documents are maintained in safekeeping that includes:
    • All documents such as Loa Agreements, Promissory Notes, Mortgage and Collateral documents…etc are kept in secure fireproof safes.
    • Access to these documents is authorized only to a limited number of staff.
    
    
13. Security and Collateral Revaluation: Regular revision as to the value and dates of collateral document.