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AFRICAN DAWN ANNUAL REPORT 14

Notes to the Financial Statements 36. Segmental Report continued BRIDGING FINANCE SEGMENT The Bridging Finance Segment is no longer granting any news loans and is in the process of winding up all existing loans. As such the winding up is attended to by the Credit Committee which meet to assess progress on the winding up of the debtors book. Current risk management Credit risk management is overseen by the Credit Committee. The Credit Committeeís composition includes a cross section of management: • Chief Executive Officer • Managing Director - Personal and short term loans • Managing Director - Debt management • Group Legal Advisor (Invitee) The Credit Committee meet in order to evaluate the following: • The Collection Books • Provisioning and Provision Policy • Credit Policy During the current financial year the committee took the decision to start convening meetings on an ad-hoc basis as needed due to the the reduced nature of the book. PERSONAL AND SHORT TERM SEGMENT Debtors book risk management Elite manages the risk on the debtors book firstly through application evaluation before any loans are granted, secondly through a receipt management process and lastly with an integrated collection process. Application evaluation This evaluation process ensures that all loan applications are evaluated, objectively and free of human intervention. A flexible matrix has been designed to cater for different environments. The minimum risk levels acceptable on the matrix are always higher than the requirements of the National Credit Regulator. The current macro-economic environment is creating even more pressure on the granting of credit and it is for this reason that Eliteí'eds credit granting is perhaps more conservative than the average micro financier in the market today. Debtors receipts management process The debtors receipts status is categorised depending on their payment history and follow up information obtained by consultants. There are 5 categories broken down broadly into 1. Debtors account current 2. Debtors account missed one payment 3. Debtors 60 - 90 days in arrears 4. Debtors 90 to 150 days in arrears 5. Debtors to be transferred to collections Collections process Once a debtor is unable to be recovered through the receipts process it is transferred to the debt collections department which traces the clients, establishes the customer status and, if no new payment arrangement is made, engages in legal action to collect the debt. Impairment allowances The impairment calculation utilises a debtors age analysis. This analysis is scientifically designed based on debtors aging, supported by more than 18 years’ experience in the micro finance environment. The impairment calculation is presented for evaluation and approval by the credit committee on a monthly basis. Debtors write off During the current financial year bad debts increased by 235% because increased adverse conditions in the unsecured lending market. AFRICAN DAWN 7 6 ANNUAL REPORT 2014


AFRICAN DAWN ANNUAL REPORT 14
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