WABI CASH-FLOW BASED MICRO LENDING
3.1.1 Wabi cash-flow based micro lending focus on evaluating the MSMEs cash flow rather than physical assets, allowing MSMEs to determine creditworthiness based on income statements and financial health.
3.1.2 These loans are designed to provide flexible repayment terms that align with the MSMEs cash flow cycles, making it easier to manage repayments without financial strain.
3.1.3 Wabi cash-flow based micro loans are typically short to medium-term in nature, offering relatively small amounts that cater to immediate business needs.
3.1.4 The loan amounts will vary based on the MSMEs cash flow performance and credit assessment, ensuring that financing is appropriate for their specific situation. The maximum loan amount shall be as indicated in Annex 1.
3.1.5 The loan will have a competitive lending interest rate, as indicated in Annex I.
3.1.6 MSMEs can expect quicker access to funds through Wabi cash-flow based micro loans, as the application and approval processes are streamlined to facilitate timely financing.
3.1.7 The application for the micro loan can be made using android or iOS app, allowing MSMEs to complete their applications efficiently and receive funds in a timely manner.
3.1.8 Based on the cash flows inputted in the system (Cash Flow Fintech Platform) and other required data, a credit scoring will be made.
3.1.9 If the borrower presents additional collaterals besides personal guarantee, the credit scoring will be higher.
3.1.10 Loan repayments will be made weekly, bi-weekly, or monthly. The maximum loan repayment period shall be as indicated in Annex I.
3.1.11 The MSME will have easy access to view the outstanding credit balance and/or loan repayment schedule in the app.
3.2.1 MSMEs shall have an account in the Bank and have transactions at least in the past three months.
3.2.2 MSMEs shall record their daily transaction in the app (Wabi cash-flow based micro lending platform) for at least three months.
3.2.3 MSMEs shall provide cash flow statements, income statements and balance sheets, to demonstrate their financial health and cash flow patterns.
3.2.4 MSMEs shall present personal guarantee.
3.2.5 MSMEs will capture the following documents on the system/app:
- a) Renewed business license,
- b) Business registration certificate,
- c) Tax Identification Number (TIN),
- d) Signatory identification card,
- e) Signatory photograph,
- f) Bank statement of at least last 3 months of the Guarantor, and
- g) Other documents like insurance, financial statements, tax clearance, etc., as required.
3.3.1 The MSME will complete the loan application in the system that captures essential information, including personal and business details, the MSME’s assets, the requested loan amount, the purpose of the loan, and the attachment of relevant documents in the system/app.
3.3.2 The MSME will submit the loan request through the app to the respective Branch (for steps to be followed by the MSME, refer Annex III).
3.3.3 All KYC and due diligence activities will be performed as per the Bank’s Credit Policy and Credit Operations Procedure Manual.
3.3.4 The RO/CSO will generate the requested loans from the Bank’s portal and conduct a review.
3.3.5 The RO/CSO will check correctness of customer’s financial and other required filled data and appropriateness of the requested loan amount using various means including bank statement, cash flow statements, balance sheets, income statements and customer visit and inform the Branch Manager for further review..
3.3.6 The Branch Manager will generate the credit scoring and relevant documents from the Bank’s portal. The credit scoring will be calculated by the platform based on the following criteria:
- a) Entrepreneur’s Profile (10%-20%), Enterprise’s profile (10%-20%),
- b) Enterprise’s profile (10%-20%),
- c) Guarantor’s profile (10%-20%),
- d) Assets registered (10%-20%),
- e) Cash flow (40%-50%).
3.3.7 The Branch Manager will check correctness of customer’s financial and other required data and appropriateness of the requested loan amount using various means including bank statement, cash flow statements, balance sheets, income statement.
3.3.8 The Branch Manager also may carry out a verification process, which could include contacting references, confirming employment, or conducting site visits to validate the information provided.
3.3.9 The Branch Manager will either accept or reject the loan request based on the credit scoring and checked MSME information.
3.3.10 If the Branch Manager accept the request, he/she will send the request to the Regional Office through the portal, for further processing.
3.3.11 The MSME will receive the loan request status notification.
3.4.1 The Manager, Regional Credit Analysis and Follow-up will generate requests from the portal and assign a Credit Analyst.
3.4.2 The Credit Analyst at the Regional Office will:
3.4.2.1 conduct a credit assessment by reviewing the MSME’s credit history, cash flow and financial health to determine eligibility.
3.4.2.2 generate the credit scoring and analysis from the Bank’s portal.
3.4.2.3 carry out a verification process, which could include contacting references, confirming employment, or conducting site visits to validate the information provided.
3.4.2.4 prepare a loan analysis report and send to the Manager, Regional Credit Analysis and Follow-up.
3.4.3 Once the application has been reviewed and signed by the Manager, Regional Credit Analysis and Follow-up, he/she will inform the Regional Director for final review and approval.
3.4.4 The Regional Director will make the final approval decision.
3.4.5 The MSME will receive loan approval decision (approval notification) through SMS/in the app.
3.4.6 The RO/CSO will call and remind the customer to present the original documents for verification.
3.4.7 If the MSME submits the relevant original and copy documents, the RO/CSO will check the documents and keep the copies for custody.
3.4.8 The BM will further check the relevant provided documents.
3.4.9 The RO/CSO will notify the MSME to bring insurance coverage.
3.4.10 The MSME will send insurance request through the app.
3.4.11 Awash Insurance Company will receive the request through the portal. The insurance is for the business and its owner well-being like business assets against catastrophes and accidents, person’s health, etc.
3.4.12 The RO/CSO will collect the insurance certificate and file for custody.
3.4.13 The Branch Auditor will check the copy documents and insurance certificate.
3.4.14 The RO/CSO and BM will disburse the loan to the customer account by deducting the required fees and charges. The fees and charges shall be as per the Bank’s Terms & Tariffs.
3.5.1 The MSME will receive a repayment schedule outlining the terms and timeline for loan repayments, ensuring clarity on obligations and due dates.
3.5.2 The MSME will receive SMS/calling reminders at specified intervals.
3.5.3 The RO/CSO will collect the loan repayments manually, deducting from the customer’s account.
3.5.4 Customized reports by Branches and Regional Offices will be generated for follow-up purposes.
3.5.5 Each Branch will follow up on the timely repayment of loans and manage non-performing loans within its domain.
3.5.6 Regional Offices will regularly follow up on loan status in the branches under their supervision.
3.5.7 Area Managers and Manager, Regional Credit Monitoring and Follow-up will oversee the loan status in their Region using monthly reports.
3.5.8 The Portfolio Management Directorate will oversee the loan status in the Bank using monthly reports.
3.6.1 The Bank’s dedicated customer care telephone number (8980) shall be available for enquiry/complaint lodgment at any time (24/7).
3.6.2 In addition to the dedicated customer care telephone number (8980), complaints/enquiries can be made in person, through writing, or any other available means.
3.6.3 Records of all customer enquiries/complaints and how such complaints are redressed shall be kept.
This Procedure Manual shall be kept in safe custody of the concerned supervisors confidentially.
4.2 Exceptions to the Procedure Manual
Any exceptional cases to this Procedure Manual, if any, shall be forwarded to the CEO for approval before implementation.
4.3 Revision of the Procedure Manual
Unless there is special enforcement to revise this Procedure Manual in the meantime, it shall be revised as and when required, but preferably every three years and approved by the CEO. The Director, SME and Personal Banking Directorate shall initiate and manage the timely revision of this Procedure Manual.
4.4 Repeal and Replacement
All prevailing procedures/guidelines of the Bank contravening with this Procedure Manual, if any, are hereby repealed and replaced by this Procedure Manual.
4.5 Effective Date of the Procedure Manual
This Wabi Cash-Flow Based Micro Lending Procedure Manual shall be in force effective from May, 2025.
