Loan Appraisal & the 3x Savings Collateral Rule

1. Overview & Business Value#

This comprehensive operational guide details the architecture, business workflows, configuration parameters, and execution steps for Loan Appraisal & the 3x Savings Collateral Rule within SmartERP.

Enforce statutory borrowing limits, calculate debt-to-income ratios, and validate the cooperative 3x savings collateral multiplier.

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2. Prerequisites & Security Access Groups#

• Required Modules: smarterp_sacco_core, smarterp_equb, smarterp_loan_management
• Security Groups:
  • SACCO Loan Officer (Technical ID: smarterp_sacco.group_sacco_officer)
  • SACCO Credit Committee Member (Technical ID: smarterp_sacco.group_sacco_committee)
  • SACCO General Manager (Technical ID: smarterp_sacco.group_sacco_manager)
• Master Data Dependencies: Member KYC profiles, share capital registers, savings product tiers, loan products with reducing-balance schedules, and Equb rotational pool configurations.

3. Step-by-Step Configuration & Execution#

Step 1: Navigating to the Module Interface#

1. Log into your SmartERP instance at https://smarterp.et/odoo.
2. Open the main App Switcher (grid icon in the top-left corner).
3. Select the SACCO & Equb app icon.
4. From the top navigation bar, open SACCO & Equb → Members → KYC Registry / Savings Accounts / Loan Applications / Equb Pools.

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Step 2: Creating and Parameterizing Records#

1. Click the New button in the top-left control panel.
2. Complete the mandatory fields in the record form:
   • Member Identification Number (Mandatory): Unique membership number complying with Ethiopian Cooperative Commission rules
   • Full Name & Kebele ID (Mandatory): Verified member identity with physical residence verification
   • Share Capital Subscriptions (Mandatory): Subscribed shares not exceeding statutory 10% member ceiling (Proclamation 985/2016)
   • Primary Savings Product (Mandatory): Compulsory regular monthly savings account configuration
3. Configure optional operational parameters and localized tags as required:
   • Guarantor & Collateral (Optional): Approved co-signers with locked savings accounts or registered vehicle/property lien
   • Equb Rotational Group (Optional): Linked digital Equb pool with lottery draw eligibility
   • Beneficiary Nominee (Optional): Designated next of kin for death or disability benefit transfer
4. Click the Save icon in the control bar to commit the record.

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Step 3: Validating and Processing Transactions#

• State Transitions: Execute operational state progression (Application → KYC Verified → Approved → Active / Disbursed → Delinquency Monitored → Settled).
• Ledger & System Impact: Loan disbursement debits loans receivable and credits cash/bank; loan repayments credit interest income and loan principal, updating 5-tier NBE provisioning registers.
• Audit Verification: Automated recording of author ID, timestamp, and immutable revision history.

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The Statutory 3x Savings Multiplier Rule#

To safeguard cooperative solvency and member deposits, Ethiopian cooperative bylaws enforce the 3x Savings Rule:

$$\text{Maximum Eligible Credit} \le 3 \times \text{Unencumbered Member Savings}$$

$$\text{Available Borrowing Capacity} = 3 \times \left( \text{Total Savings} - \text{Pledged Guarantor Holds} \right) - \text{Existing Loan Balances}$$

The complete loan appraisal and NBE provisioning lifecycle:

[sacco-loan-appraisal-nbe-provisioning]

Debt-to-Income (DTI) & Net Pay Verification#

In addition to savings collateral, workplace and institutional SACCOs must verify disposable salary:

$$\text{Debt-to-Income Ratio (DTI)} = \frac{\text{Total Monthly Debt Obligations}}{\text{Gross Monthly Salary}} \times 100\% \le 50\%$$

Under Ethiopian labor regulations, total deductions cannot reduce a worker's monthly take-home pay below one-third (33.3%) of their basic salary. SmartERP automatically blocks loan approvals where monthly repayment schedules violate this threshold.

Conducting the Credit Appraisal in SmartERP#

1. Open SACCO > Loans > Loan Applications and click New.
2. Select applicant member; the system automatically calculates:
   • Cumulative unencumbered mandatory savings.
   • Active loan balances across all cooperative facilities.
   • Pledges made as guarantor for other borrowing members.
   • Maximum allowable borrowing ceiling.
3. If requested amount $\le \text{Capacity}$, the system displays a green Collateral Compliant badge.
4. If requested amount $> \text{Capacity}$, the system blocks progression unless additional peer guarantors or physical collateral are attached.
5. Click Generate Comprehensive Credit Appraisal Report.

4. Advanced Configuration Points#

• Automated Actions & Scheduled Tasks (Crons):
  • SACCO: Accrue monthly member savings interest (smarterp_sacco.ir_cron_savings_interest): Runs on the final day of each calendar month to credit interest
  • Loan: Evaluate 5-tier NBE delinquency classification (smarterp_sacco.ir_cron_loan_delinquency): Runs nightly to compute loan loss provisions per NBE directives
  • Equb: Execute scheduled lottery draw (smarterp_sacco.ir_cron_equb_draw): Runs on defined pool cycle dates using provably fair random selection
• Custom Print Templates & Reports:
  • Member Savings Passbook & Transaction Ledger
  • Loan Amortization Schedule (Reducing Balance)
  • NBE 5-Tier Delinquency & Loan Loss Provisioning Statement
  • Annual Patronage Dividend Distribution Schedule
• Multi-Company Rules: Record-level security isolation under Company 1 (Ashewa Technology Solutions S.C.), preventing cross-company ledger leakage across parent and subsidiary legal entities.

5. Comprehensive Troubleshooting Matrix#