Loan Officer Manual: Banco Solidario
As noted in Principle 1, Avoidance of Client Over-indebtedness, all financial institutions should carefully establish the borrower's ability to afford their loan and repay it. Borrowers should be able to handle debt service requirements without sacrificing their basic quality of life. Similarly, the institution takes adequate care that non-credit, financial products (such as insurance) extended to low-income clients are appropriate to their needs and means. Banco Solidario shared with the Campaign their Loan Officer Manual, which includes a Code of Ethics for credit staff and procedures for financial and non-financial evaluation. The Code of Ethics gives loan officers full responsibility for client capacity analysis, and the manual guides loan officers thorough the analysis process, including the relevant financial formulas. The manual makes it clear that Banco Solidario does not rely on collateral for determining a client's capacity to repay, but rather on careful evaluation of the clients economic and social situation. The instructions in the manual help loan officers make quality disbursement decisions and minimize the risk of client over-indebtedness.