1. Credit risk mitigation arises when there are defaults. There is a risk.

To reduce this, loan initiation

is important. If the client is just applying, there must be loan initiation because loan initiation is
client selection. When the client arrives,they interview him or her to find out the client's
background as well as his or her source of payment and source of income. Then, after the loan
initiation, you may give him a loan. Another important thing is the monitoring. Monitoring his
payment. The employee should always be reminded whenever the client pays. Before the client's
payment arrives, the employee should have a notification for the payment, and during the
payment, the employee must also remind his client that now is the due date. Also, monitor his or
her condition. First, if the borrower is a businessman, visit his business. Maybe it's closed or it's
losing money. so that the bank knows what can be done if, for example, the business is
weakening. What can we do to not end up with a pass due Next, if the client is working and his
source of income is his or her salary, the bank will look at his company. Maybe the company will
close, or maybe he or she has resigned. The bank must also monitor the client's work; in that way,
the client's account will not become a problem.

2. In the loan approval, similar to number 1, what is started is the loan initiation it is handled by the
account officer. The account officer is the one who conduct the initial evaluation with the client,
having cash flow to see if his income can handle what he/she is paying for. then, they will
conduct an initial C.I. where in the client will go to his/her client house so that they must know if
that's where he really lives. Thre is also a process where in they will take a selfie at the client's
house, with the client. Then the employee is required to check his/her bills. After the installment
from loan initiation at the branch, it will transfer to the originating branch. Then, that will go to
the credit department. Where those who did C-C.I. So, the information obtained during the initial
interview besides the initial C.I., will be validated by the credit department. Then, check if the
requirements are complete. Then after the C.I.B.I. is conducted, if there is collateral, the appraisal
of the collateral, a report will be made and then it will go directly to the evaluation department.
They will evaluate if the recommended amount is correct. In the evaluation, the documents will
be looked at. The legality, those submitted, like F.S. after evaluation, recommend for approval.
The approval has a level of amount. The manager's approval is 50,000 below, then to the branch
banking group head, retail banking, operation, and sales head. Then, the president, credit
committee, and the board. That's in brackets. Where the approved or recommended amount will
drop. After the evaluation is recommended, it will be returned to him, he will sign it. But when
it's above 50,000, that's the next level. If a bracket falls on it, that will be approved. And their
biggest loans, which are about 5 million and above, are approved by that board. That is discussed
during the board meeting, presented. After being signed by the assignatories, based on the bracket
of approving authority, it will be returned to the originating branch. Arriving at the branch, the
release is scheduled. Check the documents if they are complete then schedule the release.
3. They have factors to consider, which are called the 5C's: character, capacity, capital, collateral,
and conditions. The character—this is what needs to be known—is the willingness of the person.
Even if it is said that the income of the client is 100,000 per month but the client is too lazy to
pay, there is nothing. So it is necessary to know their willingness. It's not just that the client's
salary is high. Then, in terms of capacity, this is where the source of income and stability come
in. Are they regular employees, and how long have they been with the company? Because if it's a
salary loan, they don't accept it if the employee is only under 1 year with the company. They
grant loans at least 1 year old to be qualified to get a loan. Then, when the client is a
businessman, his or her business must be ongoing. Their licenses should be okay. As for
collateral, that is also a part of mitigation. If you want to avoid ending up with that problem
account, ask for collateral. Because, for example, you borrowed $100,000 and took land and a
house as collateral, you can't help but pay that. Because if not, your land and house will be seized.
Because if the value of the house is 500,000, you will not be loaned 500,000 compared to your
collateral. But at least when they pull it, you lose. So you will not neglect the loan. That's what
they often use. Character, capacity, and collateral

4. No matter how good credit management is, no matter how many manuals they have, if it’s not
followed, there is nothing. It is necessary to implement what is written,and what must they do?
Because, for example, their manual is on credit, the client's payment must be by check. But they
have allowed clients who do not check. So, when Banko Central saw that, they were wrong
because it was not written. What is in the policy must be followed to be effective. He said that it
is effective when he handles credit management when the non-performing loans of a branch are at
a low level. They have a risky appetite. Each department, when it comes to loans and their risk
appetite is below 10%, has a problem. Their risk appetite is 10% lower than regular loans. When
it comes to microfinance loans, it is 5%. So, when your microfinance operation is 5%, the
problem accounts for itself. When it comes to regular loans, if you are 10% above, the operation
is also ugly. But their branch in Tanauan is the same. Both below 10% and below 5%. Overall,
they are below 10%. He can't say that their compliance was very effective, but at least they co-
controlled. Those who handle accounts are still important. You need to focus on the client, the
reminders, your visits, etc. that should be monitored.