During my stay in Chifeng, China over the last two weeks, I have closely observed the work of ACCION Microcredit Company’s (AMC) loan officers and I have also experienced the daily operation of AMC. I am very impressed by the loan officers and the fresh energy AMC injected into Chifeng’s finance industry. Being the first 100% foreign-owned Microcredit Company in China, ACCION has had to overcome many difficulties.
AMC provides micro and small businesses with non-collateralized loans basing their underwriting on ACCION’s proven methodology of cash flow lending. Loan uses are mainly for businesses, such as working capital and purchases of income generating assets. AMC remains focused on the micro market with loan sizes starting at one thousand Yuan (RMB1,000) for a maximum term of 12 months with both principles and interests being paid back in installment monthly.
AMC’s main advantages in the urban market include flexibility of loan guaranty and customized services. Guarantors do not have to be regular salary earners, as long as they have ability to pay back the loans. Loan officers talk closely to applicants about their family and their business, and they also visit their home and businesses to collect first hand information. They also use every channel, such as friends and business partners, to learn more about the clients. Through these, clients’ month income & expenses, cash flows, personal creditworthiness, and other information can be evaluated and cross-checked.
Apart from four big state-owned banks, there are also Postal Savings Bank of China (PSBC), Rural Credit Cooperatives, Baoshang Commercial Bank, many Pawn Shops, and more than twenty Microcredit Companies which offer collateralized lending in Chifeng. Baoshang Commercial Bank is the major competitor of AMC because it offers the same type of loans as AMC’s. However, it has higher approval requirements and its procedure is more complex. Moreover, it is constrained by a commercial banking culture.
It is difficult for many micro and small businesses to obtain loans from four state-owned banks, other Microcredit Companies, and Pawn Shops due to their requirements for collateral and guarantors with regular salaries. RCCs also require collaterals for loans above 150,000 Yuan.
PSBC offers group guaranty loans which require three members. Though it suffers negative reputation of backward management, it cooperates with a German microfinance consulting company to improve its management and it is developing different types of non-collateral microloans.
The success of Microcredit Companies depends largely on the performance of the loan officers and managers. Loan officers are one of the key assets of AMC. They are all young and passionate about their career, and they have strong desire to do better. Their job is really not easy. From each of them, I saw different characteristics that make an excellent loan officer. I summarize here five most important characteristics.
Strong sense of social responsibility
I was greatly touched by some of AMC’s loan officers who have very strong sense of social responsibility. They always follow their principles whatever they encounter to make sure their businesses are going the right way. They also make suggestions to fellows for improvement.
I think this is the most important characteristic. Firstly, a good loan officer must be responsible to his company. Actually, he bears less responsibility than his company because he may take a high risk loan and leave AMC, and AMC thus bears the whole costs. AMC relies on loan officers for much information, so loan officers should be highly ethical. Moreover, loan officers have connections to all kinds of clients and they face many external temptations. A good loan officer should also be responsible for his clients. They are the most direct company image to clients. Only by serving and protecting clients well, can AMC achieve sustainable growth.
Strong psychological capacity
Loan officers have to deal with all kinds of clients. They have to stay calm and maintain relationship with clients whatever situation they meet. A loan officer of Hongshan Branch once was rejected by a small business owner with humiliation when she was doing marketing. However, she responded with toughness and dignity, and finally the small business owner became her client. This needs great patience and psychological capacity.
Down to earth, sharp observation and strong interpersonal skills
I feel strongly that all loan officers I followed are very down-to-earth. They know what clients care about and what they have to find out. They also know how to talk to different clients by observing them. A good loan officer should also be able to recognize small details while talking to clients, in order to judge objectively.
Having witnessed part of AMC’s work, some questions come up to my mind. As mentioned before, AMC’s loan application does not require collateral and its procedure is easier than the competition. Since I could only spend such a short time in AMC, I did not have a chance to learn more about risk management, so I cannot comment on AMC’s practice.
This is the end of my journey to ACCION’s China program. I would like to thank Duncan Frayne, Michel Plouffe, Viacheslav Rojkov Helena Gao, Lan Luo, Xue Wang, Dandan Wang, Fei Song, Xiujie Li, Jiayang Xie, and Microfinance Initiative of Nottingham University. Thank you all for your support and help!