Oromia Credit & Saving Share Company (OCSSCO)

Oromia Credit & Saving Share Company[OCSSCO]
Oromia Credit & Saving Share

Company
[OCSSCO]
Housing and General Purpose

Loan Policy & Procedures Manual
Jan., 2013
Finfinnee
Employee - Housing & General Purpose Loan Policy & Procedures Manual Page 1
Table of Contents
I. Introduction ..........................................................................................................4
I. Vision of Credit supply and delivery core process .................................................4
II. Mission of Credit supply and delivery core process ...........................................5
III. Major objectives of Credit supply and delivery core process ...............................5
IV. Values and Principles of Credit supply and delivery core process.......................6
V. Importance of Credit supply and delivery core process Manual..........................7
VI. Binding rules, regulations, policies and directives.............................................8
VII. OCSSCO’s Credit supply & Delivery Core process manual objectives .................8
CHAPTER ONE ....................................................................................................... 10
Employee Housing Loan ......................................................................................... 10
1. Targets ............................................................................................................... 10
2. Definition of terms in employee housing loan ....................................................... 10
3. Housing Loan delivery procedures ....................................................................... 12
4. Housing loan guarantee and Documents to be fulfilled ......................................... 13
5. Loan Size, Interest, Application Fees & Loan Term ............................................. 14
6. Saving (compulsory) ......................................................................................... 15
7. Penalty and court cases .................................................................................... 15
CHAPTER TWO ...................................................................................................... 20
General Purpose Loan ............................................................................................ 23
1. Definition of terms in General Purpose Loan..................................................... 23
2. Targets ............................................................................................................ 23
3. General Purpose Loan purposes........................................................................ 23

4. Eligibility criteria and general directions............................................................ 24
5. Collateral/guarantee/ options and required documents ..................................... 25
6. General Purpose Loan provision Procedures ...................................................... 28
7. Loan size and loan term.................................................................................... 29
8. Interest ............................................................................................................ 29
9. Fees and Service charges ...................................... Error! Bookmark not defined.
10. Saving (compulsory) ...................................................................................... 29
11. Penalty and court cases ................................................................................. 30
I. Introduction
Business Process Reengineering (BPR) is defined as elemental rethinking and
radical redesigning of the business processes in order to achieve remarkable
improvements in critical measures of performance like cost, service, quality,
and speed. In organizations where BPR is implemented, jobs are organized
based on identified and named processes that yield a certain outcome.
Thus, OCSSCO has studied BPR to overcome the challenges that hinder its
growth and to change its service delivery modes and quality radically as well as
achieve remarkable improvements in cost, service, quality, and speed through
eliminating hand offs from its service provision processes.
OCSSCO names its core business process as ’’Credit Supply and Delivery Core
Process’’ and here by introduces new service delivery policies and procedures.
In the newly designed process OCSSCO can satisfy and meets the needs of
both customers and stake holders and it is expected to deliver speedy,
transparent, and customer focused financial services with cost effective
strategies.
Thus, this working manual is, therefore, prepared to facilitate and enable
service providers of the company to standardize and simplify the service
delivery procedures in all branches of the company.
I. Vision of Credit supply and delivery core process

To make OCSSCO financially self sustained model MFI and through effective &
efficient service provision enhancing the livelihood of low-income people in the
entire Oromia,
II. Mission of Credit supply and delivery core process

To provide need based financial services, widening and expanding access to
sustainable and cost efficient financial services to low-income rural and urban
people of Oromia
III. Major objectives of Credit supply and delivery core

process
 To fill the financial needs of those at bottom line who are in need of the
services but unable/denied to access from other sources due to
stringent requirements
 To provide sustainable and cost effective saving and Credit services to

Micro and Small Enterprises to enable them create their own job and
contribute to the regional economy in particular and the national
economic growth and transformation in general.
 To provide sustainable and cost effective saving and credit services to the
solidarity group based loan customers and individual microloan
borrowers to fill their financial need gaps and enable them contribute for
the regional economy in particular and national economic growth and
transformation in general.
 Empowering women in the region economically through provision of

micro financial services
 Contributing to the struggle against poverty and unemployment in the

region through provision of sustainable financial services,
 Enhancing the saving culture in the region and mobilize more deposits to
finance feasible projects and create more job opportunities in the region
 Encouraging women and youths to participate in creating household

level jobs and generate income so as improve the livelihood of the
community in the region
 Professionally manages partners and third party funds and contribute in

meeting their intervention objectives
IV. Values and Principles of Credit supply and delivery

core process
The following values and principles should be maintained by core process
staffs. These values and principles are general, individual, strategic and
operational and are consistent.
General Values
 Transparency
 Zero tolerance to irregularities, delinquencies and embezzlement.
 Commitment to serve and satisfy the client.
 Commitment to work in line with working manual
 Enhancing women participation
Individual Values
These are values, which knitted together individuals and the company.
 Hard working and completeness,
 Trustworthiness,
 Prudence,
 Good personality,
 Loyalty,
 Confidentiality,
 Accountability,
 Team work/ spirit,
 Impartiality and
 Continuous improvement
Strategic Values
 Dedication to clients’ quality service,
 Participatory,
 Commitment to excellence and
 Commitment to quality and professional competence
 Enhancing women participation and empowerment
Operational Values
 Customer focused
 Mission focused
 Regular and intensive monitoring and follow up,
 Effective and efficient management,
 Cost effectiveness
 Binding to rules and regulations,
 Continuous learning from experiences and improving and
 Timely decision and reporting
V. Importance of Credit supply and delivery core

process Manual
This working manual sets a clear guide line and procedure of delivering
different financial services to the target customers. It is designed for all
company’s financial products so as to standardize the service in all operational

branches. It serves as a reference and binding policy for company’s staff to deal
with clients and stakeholders.
VI. Binding rules, regulations, policies and directives

In addition to this credit supply and delivery core process manual, there are
also pertinent proclamations, rules, regulations, policies and directives issued
to govern micro finance institutes and financial institutes by the national bank
of Ethiopia. Thus, the core process staff should take into account these polices
rules and directives issued by the National Bank of Ethiopia and others while
implementing the credit supply and delivery core process manual.
VII. OCSSCO’s Credit Supply & Delivery Core process

manual objectives
This manual contains all procedures and workflows that can deliver values to
clients’ in financial service delivery so as to attain its vision, mission and
objectives.
It also outlines the core values, which govern the manner in which OCSSCOs’
all financial products are structured, approved, delivered and managed. The
manual is also meant as an important guide in enabling branch staff and other
individuals involved in the provision of financial services to contribute towards
the overall objectives of the company.
The general objective of this manual is therefore to insure company’s success

by achieving maximum customers and stakeholders’ satisfaction so as achieve
the stretched objectives that set by the core process.
Therefore, this operational manual has the following main objectives:
 To create and put in place short, clear and uniform credit delivery model
and make these procedures transparent
 To deliver credit services targeting both small and microenterprises and

microloan borrowers efficiently, effectively and increase outreach in order
to respond the credit demand in the region
 To launch fast, client oriented and cost effective credit delivery system
that can effectively address clients and stakeholders need.
 To shift the company to saving led institute through introducing different

strategies that enables the company to mobilize more savings.
CHAPTER ONE
Housing Loan for Employees

OCSSCO provides housing loan for employees in only its Micro Bank branches
to contribute toward the efforts that have been made by government in
reducing the housing problems in major towns of the region. After the study of
BPR, OCSSCO has intended to deliver this housing loan in all its outlets so as
serve the whole employees of the region those have interest to borrow.
1. Targets
 Permanent government and non-government employees
 Police forces and
 Government appointee officials
2. Definition of terms in employee housing loan

 Housing loan: A loan to be delivered to finance construction of living
house only.
 Employee: Government, Non-government, government appointee officials
including police forces,
3. Eligibility Criteria
1. The prospective client should have good behavior or character that to be
confirmed by his/her employer
2. The customer should serve his/current office at least for six months
3. The borrower should at least left with five (5) years for retirement.
4. The borrower should present one government employee as guarantor or

his/her own house or third party house as collateral. The salary of the
guarantor should at least equivalent with the borrower otherwise, the size
of the loan is determined by one of the two salary whichever is lower or the
borrower can submit two guarantor whose salary sum is equal or higher
than the borrowers’ salary..
5. The guarantor should also at least left with five (5) years for retirement.
6. The guarantor cannot borrow from OCSSCO until the loan he/she
guaranteed is fully repaid
7. The spouse of the borrower or the spouse of the guarantor can borrow
housing loan as long as fulfilling the requirements even though the loan
taken by the other spouse is not fully repaid.
8. The loan that to be approved by the house collateral should be lower than
the estimated market price of the house by 25%.
9. The amount deposited as pre loan saving is considered as partial loan

security so that the lending branch takes in to account the amount of pre
loan saving while deciding the amount of collateral that is to be presented
by the client.
10. The house to be held as collateral can be either the property of the
borrower or the property of third party who gives his/her property as
collateral on behalf of the borrower.
11. Government appointee and police force access OCSSCOs’ general

purpose loan through securing the loan by permanent civil servant (non
appointee permanent government employee) salary guarantee or house
collateral that owned by the borrower or third party.
12. Government employee of any Oromia Bureaus, Agencies and others can
access housing loan from any OCSSCO branch where the house that to be
held as collateral is found regardless of the town where the salary is paid.
4. Housing Loan Procedures

4.1 Branch CSO explains and briefs about employee housing loan to the
prospective clients who are coming to branch office.
4.2 The CSO provides loan application and where necessary assists the
applicants in loan application process
4.3 The prospective borrower is required to serve his/her current employer

for at least 6 months
4.4 The CSO receives the housing loan application confirming the fulfillment
of all the documents (requirements).
4.5 CSO transfers all documents to branch manager on the day the
application is received
4.6 The branch manager examines and checks whether the borrowers
fulfilled all requirements and also authenticate(verify):
 All loan documents including house ownership certificate,

 construction work permit,
 letter of commitment written from municipalities not to transfer the
house to third party until the loan is fully repaid and notified by
OCSSCO lending branch and
 letters written from the borrowers’ office
4.7 Ones the documents are verified and authenticated, the CSO who is
assigned to handle the case evaluate the house that to be held as
collateral and present written estimated market value report to the
approving team.
4.8 The approving team including the assigned CSO reviews all documents
and approves the loan.
4.9 Note that the loan to be approved should be less than the estimated
market value of the collateral house by at least 25%.
4.10 The amount deposited as pre loan saving is considered as partial loan
security so that the lending branch takes in to account the amount of
pre loan saving while deciding the amount of collateral that is to be
presented by the customers.
4.11 The borrower (owner of the house) and the spouse sign the loan
agreement.
5. Housing loan guarantee (Collateral) and Documents

to be fulfilled
Borrowers Collateral to be Documents to be fulfilled
held
Permanent House collateral  Renewed Identity card of the prospective
government owned by the clients’ and the spouse
employee, borrower or by the  Official letter from borrower’s office stating:
appointees and third party that its  employment situation (permanent or
police force, NGO’s construction level temporary),
staff, police forces, is at least above  year of employment and years left for
the foundation retirement
level  marital status,
 salary amount and promise to deduct
the monthly repayment if the borrower
fails to pay
 Ownership certificate (Original),
Borrowers Collateral to be Documents to be fulfilled

held
construction plan and construction permit
 Marriage certificate or evidence of marriage
from authorized office,
 If not married, confirmation from
authorized office
 Municipalities’ official letter to secure the
house held as collateral from any transfer
or registering to meet other obligation to
third party until the loan is fully paid and
notified by OCSSCO’s lending branch
If the borrower is NGO’s staff in addition
to the above documents:
 Renew contractual work agreement
 Letter to block the borrower’s accumulated
fund
 Number of years served in the office
 Amount of accumulated provident fund
6. Application Fees, Loan Size, Interest & Loan Term

6.1 Application fee
OCSSCO charges 2% application fee on employees housing loan to be
paid before disbursing the loan.
6.2 Loan Size

The monthly repayment (principal and interest) to be repaid by housing
loan borrowers should not be greater than 1/3 of his/her monthly salary.
Taking the monthly repayment (principal and interest in to account, the

maximum loan size to be provided for housing loan is 1/3 of the
borrowers’ salary multiplied by loan term months (sixty months) less the
interest amount to be paid on the loan amount during the loan term. The
loan size to be approved should also take in to account the 1/3 monthly
salary of the borrower as well as the value of the house that to be held as
collateral.
6.3 Interest Rate

Interest rate for housing loan services is 10% on declining bases.
6.4 Loan Term

The maximum loan term of housing loan is 5 years (60 months)
7. Pre-loan Saving (Compulsory)

Housing loan borrowers should save 10% of planned loan amount as pre
loan saving before accessing the loan and monthly savings of Birr 100.00.
The pre loan saving balance should be posted on compulsory saving column
of saving ledger to protect untimely withdrawals.
8. Penalty and Court cases

The customers are required to repay the loan on the agreed repayment
installment schedules. Any past due is collected with penalty of 0.25% in a
day on the amount principal and interest matured but uncollected. The
formula to calculate the penalty is penalty = AF X0 .25% X DP, where
 AF is amount failed (principal plus interest),
 DP is Days Passed
Example If the customer failed to repay the matured installment principal
birr 100 and interest of birr 12 and passes 10 days from the schedule, the
penalty amount to be paid by this customer equals Birr 112 X 0.25% X

10day = Birr 2.80
The maximum waiting time after the installment date shall be 30 days.
Within 30 days, the customer can repay the loan with penalty as stated
above and continues as customer. If 30 days are passed, the issue shall be
taken to court and OCSSCO shall claim all outstanding loan balances,
interest due, and penalty as well other court related expenses. The lending
branch shall issue warning letter every 10 days after the installment date
has passed.
9. Activities and time required in housing loan delivery

 Performers: Branch Team Time required: Four days
No. Activities Time needed
1 Branch CSO explains about OCSSCO’s loan and saving policies and 10 min
briefs all requirements to access housing loan
2 CSO assist the applicants in using the loan application format, 20 min
receives the housing loan application confirming the fulfillment of all
the documents (requirements) and transfers all documents to branch
manager
3 The branch manager examines and checks the fulfillment of all 10min
requirements
4 The branch manager and the CSO who handle the case evaluate the 6 hrs
house to be held as collateral and present written estimated market
value report to the approving team.
5 The approving team reviews all documents and approves the loan 30 min
6 Loan agreement will be made with the borrow and spouse 30 min
7 First cycle housing loan is released 30 in
General Information or Contents of Housing Loan

Any housing loan borrower document should contain at least the following
general information.
1. Full name of the Housing Loan Borrower ___________________________________

2. Sex ____________________________________
3. Age ____________________________________
4. Addresses:
4.1 Personal (Housing Loan Borrower)
Zone/Sub City ______________________, Woreda _______________________,

Town ______________________________, Kebele_____________________, House
No._____________________, Telephone Residence _______________________
Mobile _________________________, Email; ______________________________,
4.2 His/her Office; Full Name of the Organization;

___________________________________________________________________________
Zone/Sub City _____________________________________, Woreda

_______________________, Town ______________________________, Kebele
_____________________, House No._____________________, Telephone
No._______________________________, Fax No. __________________________,
Email; ______________________________, P.O. Box _________________________
4.3. Marital Status--- Single________, Married_________, Divorced ______ or

Widowed_________, Marriage certificate or evidence of marriage from
authorized office.
If married, Full name of the Spouse,

___________________________________________________
Occupation; _________________________________________________________
If he/she is an employee, Full Name of his/her Organization

___________________________________________________________________________
Address; Zone/Sub City ______________________, Woreda

_______________________, Town ______________________________,
Kebele_____________________, House No._____________________, Telephone
Residence _______________________ Mobile _________________________, Email;
______________________________,
5. Employment conditions of the Loan Borrower

On Permanent bases _____________________________________
Years more for retirement ________________________________
On Contract bases _______________________________________
Monthly growth salary in Birr ____________________________
Years more for contact phase out __________________________
6. Supporting letter to the lending branch from his/her organization by stating

his/her monthly salary and confirming be obliged of repaying in case of
he/she be defaulted.
7. Purpose of the loan requested

 To finish the already started ones,
 To furnish,
 To Construct additional Rooms
8. Previous Credit History if repeated one

___________________________________________________________________________
___________________________________________________________________________
9. Pre-Loan Saving Amount _____________________
10. Amount of loan requested in Birr

_______________________________________
11. Type of collateral presented for loan
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________
12. Other relevant information

__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________
Name of the Borrower _________________________________

Sig.__________________
8. Branch Level Housing Loan Appraisal

Based on information filled the above, the lending branch should be able to
appraise the submitted Housing loan as follows;
 Confirm whether all mandatory requirements of the Housing loan

documents are fulfilled properly and presented.
 At least two of the branch level loan committee (branch manager & CSO or
any other one) should visit the stated house physically & present report to
the branch level loan approving team.
10. Branch Level Housing Loan Approving Team

1. All Micro banks loan approving teams are delegated to approve Housing loan
up to Birr 100,000.00. The loan approving team in these branches shall be
organized by the following core process staffs:
 Branch Manager………….……………………………………Team leader
 Branch Finance Officer (Main Accountant)………………Team member
 Branch Cashier (Main)………………………………..………Team Member
 Senior CSO ……………………………..………………………Team member
 CSO who will handle the case…………………….Team Member & Secretary
1. Other branches loan approving teams are delegated to approve the business
plans that have loan size of up to Birr 75,000.00. The branch loan
approving team shall be organized by the following core process staffs:
 Branch Manager………. …………………………Team leader
 Branch Finance Officer………………………….Team member
 Branch Cashier……………………………………..Team Member
 CSO who will handle the case …………………Secretary & team member
2. Housing loans at branch offices should be appraised and evaluated at

branch level within two days of receiving the business plan and the loan
should be approved and the borrower should be notified within five days of
receiving the business plan as long as the he/she fulfill all requirements
and the loan size is under the branch approving authority limit
3. All loans above the branches’ authority limit shall be sent to the branches’
respective Zonal offices after the branch evaluate and appraise within the
date indicated above
4. All branch level loan approving team members have equal vote in approving
the loan. If there is reservation or abstain among the members in approving
the loan, the different idea shall be recorded and the loan is approved or
rejected if the majority favors the decision.
5. No housing loan is sent to the next higher layer if the branch office
appraisal and approval committee has rejected or decided for amendment.
6. All original loan documents whether that are to be approved at branch or
zonal or head office shall be kept locked at branch office under the custody
of the branch manager
7. The loan documents that are to be sent to zonal or head office shall be only
the copy of the relevant documents.
8. The branch should thoroughly review, appraise and evaluate the loan
requests and send the minute with relevant copy of the loan documents to
Zonal office with clear opinion and recommendation. All loan approving
team members should sign on the minute of recommendation.
11. Notification of the Approved MSEs Business Loans

1. The branch manager notifies the borrower with official letter accompanying
with (use loan approval notification format) if it is under branch authority
limit.
2. The Zonal manager notifies the lending branch that the approval of the
submitted housing loan with official letter if it is under Zonal authority
limit. Then, the lending branch notifies the borrower again with official
letter that his/her hosing loan is approved and continues the next
processes.
12. Interest and Repayment Schedules
12.1 The interest on the loan approved starts to accrue on the date the loan is
released.
12.2 Repayment schedule for the total loan amount is issued on the date the
loan agreement is signed and to be given to the housing loan borrower
immediately on same date and the repayment is ought to be monthly.
CHAPTER TWO
General Purpose Loan

OCSSCO provides Microloan service to employees so that to be
utilized/invested for different economic reasons those are stated here below in
this manual.
1. Definition of terms in General Purpose Loan

 General Purpose Loan: A loan that will be provided to employees who
are working in the offices of the Regional Government of Oromia in
Districts/ Aaanaa, Zonal and Bureau levels.
 Regional Government employee: Any employee working in regional
Government of Oromia at Beuraue, zonal, Aanaa and town
administration.
 Governmental appointee is a person who is appointed by the Regional
government of Oromia on the position he/she has been working on.
These may include cabinet members, head of offices and etc.
 Police Forces are the police force who are employed under the Regional
Government of Oromia Police Commission working at Aanaa/District,
town, Zonal and Bureau level
2. Targets
Permanent employees, appointees and police forces of the Regional
Government of Oromia who are working at Bureau, Zonal offices,
Districts/Anaas and town administrations
3. General Purpose Loan purposes

General Purpose loan would be delivered for any personal purpose of
employees like,
 Medication
 Education
 Purchase of household equipments
 To cover expenses related to marriage
 To run personal businesses and etc.
4. Eligibility Criteria
a. The prospective client should have good credit history that to be
confirmed by his/her employer
b. The customer should serve his/current office at least for six months
c. The borrower should at least left with five (5) years for retirement.
d. The borrower should present one government employee as guarantor or
his/her own house or third party house as collateral. The salary of the
guarantor should at least equivalent with the borrower otherwise, the
size of the loan is determined by one of the two salary whichever is lower
or the borrower can submit two guarantor whose salary sum is equal or
higher than the borrowers’ salary..
e. The guarantor should also at least left with five (5) years for retirement.
f. The guarantor cannot borrow from OCSSCO until the loan he/she
guaranteed is fully repaid
g. The spouse of the borrower or the spouse of the guarantor can borrow
general purpose loan as long as fulfilling the requirements even though
the loan taken by the other spouse is not fully repaid.
h. The loan that to be approved by the house collateral should be lower
than the estimated market price of the house by 25%.
i. The amount deposited as pre loan saving is considered as partial loan
security so that the lending branch takes in to account the amount of
pre loan saving while deciding the amount of collateral that is to be
presented by the client
j. The house to be held as collateral can be either the property of the

borrower or the property of third party who gives his/her property as
collateral on behalf of the borrower.
k. Government appointee and police force access OCSSCOs’ general
purpose loan through securing the loan by permanent civil servant (non
appointee permanent government employee) salary guarantee or house
collateral that owned by the borrower or third party.
l. Government employee of any Oromia Bureaus, Agencies and others can
access general purpose loan from any OCSSCO branch where the house
that to be held as collateral is found regardless of the town where the
salary is paid.
5. Collateral/guarantee/ options and required

documents
1) House Collateral
The salary based loan borrower should submit house ownership certificate
that owned by the borrower him/herself or third party house. The following
should be fulfilled in house collateral loan.
 Renewed Identity card of the prospective clients’ and the spouse

 Original house ownership certificate or letter of evidence from
authorized office.
 Marriage certificate or evidence of marriage from authorized office
 If the borrower is unmarried confirmation letter from authorized office
 Loan application
 Official letter from borrower’s office stating
 employment situation(permanent or contract),
 Monthly salary amount
 Years left for termination of employment contract if known
 Credit records if any

 promise to deduct the monthly repayment from the borrowers’
salary if the borrower fail to pay
 Promise not to issue clearance until notified by OCSSCO about the
outstanding loan.
 Ganda’s or municipality’s official letter that confirms:
 The house is owned by the prospective client or third party who
agrees to give his/her house as collateral
 The house is not secured so far by other obligations
 Letter of agreement not to transfer the house to third party or not
to commit the house to other obligations until OCSSCOs’ loan is
fully repaid and clearance is issued by OCSSCO’s lending branch
If the house to be held as collateral is owned by third party in addition to the
above documents the following should also be fulfilled:
 Renewed identity card of the third party who agrees to give his
house as collateral and the spouse
 Marriage certificate of the owner of the house
 If unmarried evidence of confirmation
 Application letter that state his/her agreement to give his/her
house as collateral on behalf of the borrower
 Original house ownership certificate or letter of evidence from
authorized office.
 The confirmation letter from the authorized office that state the
house is not held as collateral for other obligations
 Letter of commitment from the authorized office to protect the
house from transferring the house to third party or commit to
other obligations until OCSSCOs’ loan is fully repaid and clearance
is issued by the lending branch
2) Salary Guarantee
2.1 The borrower should submit equivalent salary guarantee of

government employee while police forces and Government appointee
who are not considered as civil servant should guarantee their loan
by civil servant salary or house collateral
2.2 The spouse of the salary based loan customer can borrow
independently as long as she/he fulfills necessary loan requirements
2.3 The following documents should be fulfilled for salary guaranteed

salary based loan
 Renewed Identity card of the prospective clients’ and the spouse

 Renewed identity card of the guarantor and spouse
 Marriage certificate of the borrower and guarantor from authorized office
 If the borrower and guarantor are unmarried, confirmation evidence
from authorized body
 Official letter from borrower’s office stating:
 employment situation(permanent or contract),
 salary amount,
 years left for his retirement
 marital status,
 credit records if any,
 If the salary is paid directly by employing office, letter of agreement to
deduct from the borrowers’ monthly salary and to pay the monthly
repayment to OCSSCOs’ lending branch if the employee default the loan
 If the salary is paid by Aanaa/town office of Finance and Economic
Development, letter of commitment/promise by the employer office to
write a letter to Aanaa Finance and Economic Development to deduct
from the monthly salary of the borrower and pay to the OCSSCO’s
lending branch if the employee default the loan
 Official letter from guarantor’s office stating:
 employment situation (permanent or contract),
 marital status,
 monthly salary amount,
 years left for his retirement
 the fact that the guarantor doesn’t guaranty others so far,
 Commitment not to issue clearance until the lending branch
confirms the loan guaranteed by the guarantor is fully repaid.
6. General Purpose Loan provision Procedures

1. Branch CSO explains and briefs about salary based loan to the
prospective clients who are coming to branch office.
2. The CSO provides loan application and where necessary assists the
applicants in loan application process
3. The CSO receives the employee salary based loan application confirming
the fulfillment of all required loan documents that are stated here in this
manual
4. CSO transfers all the loan documents to branch manager
5. The loan approving team review all documents (application, guarantors’

office letter, marriage certificate, house ownership certificate (if the
collateral is house), and etc.
6. The approving team approves the loan and the branch manager
confirms the authenticity of the loan documents before the loan is
released.
7. The branch manager and one of the approving team members physically
visit the house and estimate the market value of the house if the loan is
secured by house collateral. The two delegated members are required to
present written report to the approving team about the house presented
as collateral
8. Once the loan is approved the borrower and the spouse as well as the
guarantor with his/her spouse should sign on the loan agreement (if the
loan is backed by salary guaranty).
9. If the loan is guaranteed by third party house as collateral, the owner of

the house and the spouse should also physically appear and sign on the
loan agreement.
7. Application Fee
OCSSCO charges 2% application fee on all salary based loan to be paid by
cash before loan disbursement.
8. Loan size and loan term

1. The maximum loan size that to be provided for salary based borrower is
1/3 of the borrowers’ salary multiplied by loan term months (24 months)
less the interest amount to be paid on the loan amount during the loan
term.
2. The maximum loan term of the salary based loan shall be 24 months
9. Interest
Interest rate for all salary based loan is 10% on declining bases.
10. Pre loan saving (compulsory)

 Salary based loan borrowers, should save at least 10% of the planned
loan as pre loan saving before the loan is disbursed. The pre loan
compulsory saving balance should be posted on compulsory saving

balance column of the saving ledger to protect untimely
 The salary based loan borrowers are required to save monthly
compulsory saving Birr 100.00.
11. Penalty and court cases

The customers are required to repay the loan on the agreed repayment
installment schedules.
 Any past due is collected with penalty of 0.25% in a day on the amount
principal and interest matured but uncollected.
 The maximum waiting time after the installment date is passed will be
30 days. Within 30 days, the customer can repay the loan with penalty
as stated above and continues as customer. If 30 days are passed, the
relationships as customer is discontinued and the issue is taken to court
and the failed customer is charged for all penalties from the matured
date to the last court decision days as well as for all related expenses to
process the legal actions and etc. The lending branch shall issue 1 st, 2nd
and 3rd warning letters every 10 days after the default date.
9. Standard of activities and time required in General Purpose

Loan delivery service and Appraisal Techniques
 Result: Provision of Salary Based Loan
 Time Required: Maximum of three days
No. Activities Maximum

Time
required
1 Branch CSO explain and brief all requirements to access salary 10 min.
based loan to the prospective clients at branch offices and assist
2 the borrowers
The in applying
CSO receives for loan salary
the employee requestbased loan application 15 min.
confirming the fulfillment of all required loan documents that

are stated here in this document and transfers client application
to the branch process owner for appraisal and approval
3 The branch manager submit the loan documents to the 15 min.

approving team
4 The loan approving team review and confirm the authenticity of 30 Min.
all documents (application, office letter, guarantors’ office letter,
marriage certificate, house ownership certificate (if the collateral
is house), and etc. Note that the house certificate should be
original. The branch and the CSO to be assigned to handle the
case will visit the collateral house (if the loan is backed by house
collateral), estimate the market value of the house and submit
written report about the collateral.
5 The approving team approves the loan and notify the loan 1 day
requesting person in letter through the branch manager
6 The prospective client and the spouse sign loan agreements 15 min.
7 Loan will be disbursed to client 10 min
8 Collateral/guarantee/ related documents should be properly 10 min

filed and documented
9 The CSO will be assigned by the branch manager to handle the 5 min.
individual loan for further follow-up, supervision, saving
mobilization and ensuring repayments
General Information or Contents of General Purpose Loan

Any General Purpose loan borrower’s document should contain at least the
following general information.
a. Full name of the General Purpose Loan Borrower

___________________________________
b. Sex ____________________________________
c. Age ____________________________________
d. Addresses:
4.1 Personal (General Purpose Loan Borrower)
Zone/Sub City ______________________, Woreda _______________________,

Town ______________________________, Kebele_____________________, House
No._____________________, Telephone Residence _______________________
Mobile _________________________, Email; ______________________________,
4.2 His/her Office; Full Name of the Organization;

___________________________________________________________________________
Zone/Sub City _____________________________________, Woreda

_______________________, Town ______________________________, Kebele
_____________________, House No._____________________, Telephone
No._______________________________, Fax No. __________________________,
Email; ______________________________, P.O. Box _________________________
4.3. Marital Status--- Single________, Married_________, Divorced ______ or

Widowed_________, Marriage certificate or evidence of marriage from
authorized office.
If married, Full name of the Spouse,

___________________________________________________
Occupation; _________________________________________________________
If he/she is an employee, Full Name of his/her Organization

___________________________________________________________________________
Address; Zone/Sub City ______________________, Woreda

_______________________, Town ______________________________,
Kebele_____________________, House No._____________________, Telephone
Residence _______________________ Mobile _________________________, Email;
______________________________,
5. Employment conditions of the Loan Borrower

On Permanent bases _____________________________________
Years more for retirement ________________________________
On Contract bases _______________________________________
Monthly growth salary in Birr ____________________________
Years more for contact phase out __________________________
6. Supporting letter to the lending branch from his/her organization by stating

his/her monthly salary and confirming be obliged of repaying in case of
he/she be defaulted.
10. Purpose of the loan requested

 Purchase of household equipments
 Education
 To cover expenses related to marriage
 To run personal businesses
 Medication and etc.
11. Previous Credit History if repeated borrower

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
12. Pre-Loan Saving Amount _____________________

13. Amount of loan requested in Birr _______________________________________
14. Type of collateral presented for loan
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________
15. Other relevant information

__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________
Name of the Borrower _________________________________

Sig.__________________
9. Branch Level Housing Loan Appraisal

Based on information filled the above, the lending branch should be able to
appraise the submitted Housing loan as follows;
 Confirm whether all mandatory requirements of the Housing loan

documents are fulfilled properly and presented.
 At least two of the branch level loan committee (branch manager & CSO or
any other one) should visit the stated house physically & present report to
the branch level loan approving team.
10. Branch Level Housing Loan Approving Team

1. All Micro banks loan approving teams are delegated to approve Housing loan
up to Birr 100,000.00. The loan approving team in these branches shall be
organized by the following core process staffs:
 Branch Manager………….……………………………………Team leader
 Branch Finance Officer (Main Accountant)………………Team member
 Branch Cashier (Main)………………………………..………Team Member
 Senior CSO ……………………………..………………………Team member
 CSO who will handle the case…………………….Team Member & Secretary
16. Other branches loan approving teams are delegated to approve the
business plans that have loan size of up to Birr 75,000.00. The branch loan
approving team shall be organized by the following core process staffs:
 Branch Manager………. …………………………Team leader
 Branch Finance Officer……………………… ….Team member
 Branch Cashier……………………………………..Team Member
 CSO who will handle the case …………………Secretary & team member
17. Housing loans at branch offices should be appraised and evaluated at

branch level within two days of receiving the business plan and the loan
should be approved and the borrower should be notified within five days of
receiving the business plan as long as the he/she fulfill all requirements
and the loan size is under the branch approving authority limit
18. All loans above the branches’ authority limit shall be sent to the
branches’ respective Zonal offices after the branch evaluate and appraise
within the date indicated above
19. All branch level loan approving team members have equal vote in
approving the loan. If there is reservation or abstain among the members in
approving the loan, the different idea shall be recorded and the loan is
approved or rejected if the majority favors the decision.
20. No housing loan is sent to the next higher layer if the branch office
appraisal and approval committee has rejected or decided for amendment.
21. All original loan documents whether that are to be approved at branch or
zonal or head office shall be kept locked at branch office under the custody
of the branch manager
22. The loan documents that are to be sent to zonal or head office shall be
only the copy of the relevant documents.
23. The branch should thoroughly review, appraise and evaluate the loan
requests and send the minute with relevant copy of the loan documents to
Zonal office with clear opinion and recommendation. All loan approving
team members should sign on the minute of recommendation.
11. Notification of the Approved MSEs Business Loans

a. The branch manager notifies the borrower with official letter
accompanying with (use loan approval notification format) if it is under
branch authority limit.
b. The Zonal manager notifies the lending branch that the approval of the
submitted housing loan with official letter if it is under Zonal authority
limit. Then, the lending branch notifies the borrower again with official
letter that his/her hosing loan is approved and continues the next
processes.
12. Interest and Repayment Schedules
12.1 The interest on the loan approved starts to accrue on the date the loan is
released.
12.2 Repayment schedule for the total loan amount is issued on the date the
loan agreement is signed and to be given to the housing loan borrower
immediately on same date and the repayment is ought to be monthly.
Annex. Housing & GPL Loan Agreement
LOAN AGREEMENT
Between
OROMIA CREDIT SAVING & SHARE COMPANY
(OCSSCO)
OCSSCO ____________________________ Branch office (hereinafter

referred as the ‘lender’) & legally represented by the Branch Manager,
_______________________________________, on the other hand),
Address of Branch Office: ___________________ Zone,

_____________________Woreda & __________________Town.
P.O. Box _______________________________
Fax No. _______________________________
Tele. No. _______________________________
E-mail _______________________________
And
Borrower __________________________________________________ (hereinafter

referred as the ‘Borrower’).
Address: Zone/sub city ______________________, Woreda _____________________,
Town ______________________ Kebele ______________________, house

No.___________________, Resident Tell. No. _____________________________, Mobile
No. __________________________, E-mail _______________________________
1. Date of the Agreement

This Loan Agreement is made on _______________/20____ between Oromia
Credit Saving & Share Company _______________________ Branch, the
‘lender’
And
_________________________________________________________________________, the
‘borrower’.
2. Amount of the Loan

The Lender: Oromia Credit Saving & Share Company ____________________
Branch Office has lent Birr _________________
(__________________________________________________________________________)
for the above acknowledged Borrower.
3. Loan Repayment Condition
The Borrower is obliged to repay the borrowed loan as follows;
i. The outstanding loan of repayment schedule is on monthly bases and shall

start on _______________/20______ and ended on _______________/20_____ with
____________ installments.
The amount of principal loan
Birr___________(___________________________________________________) and
Interest Birr_____________(_______________________________________________)
which is totally equals to Birr_____________
(___________________________________________________________________________)
as per the agreed & signed by both parties.
4. Application Fee, Interest Rate and Penalty

4.1 Application Fee: is considered as a service charge for processing the loan.
OCSSCO has been charging 2% of the approved loan as an application fee
for processing the loan which the borrower shall be paid before release of
the loan.
4.2 Interest rate: is the price of the loans. OCSSCO has been charging 10%
interest rate on its loans on declining bases. The interest rate starts
accrue on the date that the loan is released partially or fully.
4.3 Penalty: OCSSCO has been imposing penalty on daily bases in order to
enforce its loan repayment. Penalty will be effective on the borrower if the
borrower is unable to pay the stated of amount of matured loan on the
agreed installment/s. it is 0.25% of the matured principal which will start
accruing from the next day of the loan past due date.
1. Borrower
Name_____________________________________
Address: ___________________ Zone, _____________________Woreda &

__________________Town.
P.O. Box _______________________________
Fax No. _______________________________
Tele. No. _______________________________
E-mail _______________________________
Signature_______________________ Date ___________________
Husband /wife of the Borrower
Name_____________________________________
Address: ___________________ Zone, _____________________Woreda &

__________________Town.
P.O. Box _______________________________
Fax No. _______________________________
Tele. No. _______________________________
E-mail _______________________________
Signature_______________________ Date ___________________
5. Collaterals
OCSSCO has been implementing different kinds of loan guarantee and property
collateral mechanisms for the loan its loans as stated in collateral options of
this manual.
5.1Types of Loan Guarantee

a. House -----------------------------------------------------------------
b. Salary of permanent Employees ---------------------------------
The type of loan guarantee among the stated options can be described by
putting capital ‘X’ in the box of the loan guarantee option.
5.2 Name and Address of Loan Guarantor
Name_________________________________________
Address: __________________________Region/Town Administration,
_____________________________ Zone/Sub city, ____________________ Woreda
__________________________, Town, _____________________ Kebele, House No
_______________________ and Telephone No. _________________________________
Signature ________________________________
Name of the guarantor spouse_________________________________________
Address: Region/Town Administration __________________________, Zone/Sub
city _____________________________, Woreda ____________________
Town __________________________, Kebele _____________________, House No
_______________________ and Telephone No. _________________________________
Signature ________________________________
6. Obligation of the Loan Guarantor/s

6.1 The loan borrower/s has obligated to pay the outstanding loan both
principal and interest without break off each agreed and signed
installments. If the borrower is unable to pay the matured outstanding
loan, both principal and interest and pass due over thirty days, it will be
considered as the borrower him/herself has barged the agreement. Then,
the lender has a mandate of enforce the guarantor to pay the past due date
loan including penalty and un matured once by considering that the
borrower is not a faithful borrower.
6.2 Concerning collateral loan guarantee, unless provide by law, the lender
shall run on unpaid stipulated or default due for payment by law as
mentioned under Article No.97/1990 and on Proclamation No.98/1990

under Sub Article No.27 (2) the lender can own and sell the collateral.
6.3 If the guarantor is salary based guarantee, of Government Employee or

NGO’s, the lender can collect the defaulted loan, including all other related
expenses as pre the law authorize.
7. Renewed Insurance of the House
If the borrower is borrowed the loan with housing collateral, the borrower
should renew insurance agreement with the insured Company & present
the renewed insurance agreement until the loan is fully repaid. If the
borrower is unable to renew insurance agreement of the house, the lender
can renew and collect its insurance expense.
8. Loan Utilization
8.1 The borrower should make use of the loan only for the purpose the loan is
requested. If the borrower wants to change his/her business, he/she must
agree with the lender and gets permission because the lender has the right
to check the business.
8.2 If the borrower has changed the business without knowledge of OCSSCO
lender branch, the lending branch has a mandate of enforcing to refund the
loan including the interest.
9. Resident House and its documents for collateral loan guarantee
The lender should have the following full information and evidences of the
house held as a collateral.
9.1 Original plan__________________
9.2 Boundary (location) of the House
In Northern Direction___________________________
In Southern Direction____________________________
In Eastern Direction____________________________
In western Direction __________________________
9.3 Information of the House or Buildings
Address Standards
Ownership of the Price
of the
House Zone Town Kebele House No. estimation
House
9.4 If classes are built as an extension on the already held house, the classes
can be considered as additional values of the pervious house for
repayments.
10. The House held as collateral must be free of any other guarantee.
The house which is held as a collateral ought to be free of any other guarantee
or not held by any legal issues. The owner of the house both husband & spouse
must singe the agreement that it is forbidden to sell or transfer the ownership
to third parties until the loan is fully repaid.
Name and Signature of the Collateral Agreement
Lender
Representative;
OCSSCO _______________________ Branch

Name___________________________________
Address of Branch Office: ___________________ Zone,

_____________________Woreda & __________________Town.
P.O. Box _______________________________
Fax No. _______________________________
Tele. No. _______________________________
E-mail _______________________________
Signature_______________________ Date ___________________
Guarantor of the loan
Name_____________________________________
Address: Zone ___________________, Woreda _____________________ & Town

__________________.
P.O. Box _______________________________
Fax No. _______________________________
Tele. No. _______________________________
E-mail _______________________________
Signature_______________________ Date ___________________
Name and Signature 0f husband/wife of guarantor
Name_____________________________________
Address: Zone ___________________, Woreda _____________________ & Town

__________________.
P.O. Box _______________________________
Fax No. _______________________________
Tele. No. _______________________________
E-mail _______________________________
Signature_______________________ Date ___________________
Name and signature of Evidences’

1.______________________________ signature _________________
2.______________________________ signature _________________
3.______________________________ signature_________________
Stampe of the lender branch

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Oromia Credit & Saving Share Company[OCSSCO]

Oromia Credit & Saving Share

Housing and General Purpose

I. Vision of Credit supply and delivery core process .................................................4

II. Mission of Credit supply and delivery core process ...........................................5

V. Importance of Credit supply and delivery core process Manual..........................7

VI. Binding rules, regulations, policies and directives.............................................8

CHAPTER ONE ....................................................................................................... 10

Employee Housing Loan ......................................................................................... 10

2. Definition of terms in employee housing loan ....................................................... 10

3. Housing Loan delivery procedures ....................................................................... 12

4. Housing loan guarantee and Documents to be fulfilled ......................................... 13

5. Loan Size, Interest, Application Fees & Loan Term ............................................. 14

6. Saving (compulsory) ......................................................................................... 15

7. Penalty and court cases .................................................................................... 15

CHAPTER TWO ...................................................................................................... 20

General Purpose Loan ............................................................................................ 23

1. Definition of terms in General Purpose Loan..................................................... 23

3. General Purpose Loan purposes........................................................................ 23

4. Eligibility criteria and general directions............................................................ 24

5. Collateral/guarantee/ options and required documents ..................................... 25

6. General Purpose Loan provision Procedures ...................................................... 28

7. Loan size and loan term.................................................................................... 29

9. Fees and Service charges ...................................... Error! Bookmark not defined.

10. Saving (compulsory) ...................................................................................... 29

11. Penalty and court cases ................................................................................. 30

I. Vision of Credit supply and delivery core process

II. Mission of Credit supply and delivery core process

III. Major objectives of Credit supply and delivery core

 To provide sustainable and cost effective saving and Credit services to

 Empowering women in the region economically through provision of

 Contributing to the struggle against poverty and unemployment in the

 Encouraging women and youths to participate in creating household

 Professionally manages partners and third party funds and contribute in

IV. Values and Principles of Credit supply and delivery

 Zero tolerance to irregularities, delinquencies and embezzlement.

 Commitment to serve and satisfy the client.

 Commitment to work in line with working manual

 Enhancing women participation

 Team work/ spirit,

 Commitment to excellence and

 Commitment to quality and professional competence

 Enhancing women participation and empowerment

 Regular and intensive monitoring and follow up,

 Effective and efficient management,

 Binding to rules and regulations,

 Continuous learning from experiences and improving and

 Timely decision and reporting

V. Importance of Credit supply and delivery core

company’s financial products so as to standardize the service in all operational

VI. Binding rules, regulations, policies and directives

VII. OCSSCO’s Credit Supply & Delivery Core process

The general objective of this manual is therefore to insure company’s success

Therefore, this operational manual has the following main objectives:

 To deliver credit services targeting both small and microenterprises and

 To shift the company to saving led institute through introducing different

Housing Loan for Employees

2. Definition of terms in employee housing loan

Zone/Sub City , Woreda _,

Email; ______, P.O. Box _

4.3. Marital Status--- Single____, Married_, Divorced __ or