SPIS Toolbox - Credit Policy: Risk Analysis - Revision history

Ranisha at 19:30, 21 July 2020

2020-07-21T19:30:46Z

Ranisha at 10:55, 30 August 2018

2018-08-30T10:55:53Z

Stefan Eibisch at 14:53, 12 July 2018

2018-07-12T14:53:15Z

Ranisha at 13:41, 22 March 2018

2018-03-22T13:41:12Z

Ranisha at 11:14, 14 November 2017

2017-11-14T11:14:09Z

Admin at 14:24, 13 November 2017

2017-11-13T14:24:44Z

Admin at 14:08, 13 November 2017

2017-11-13T14:08:41Z

Ranisha at 10:56, 13 November 2017

2017-11-13T10:56:57Z

Stefan Eibisch at 09:50, 22 September 2017

2017-09-22T09:50:22Z

Ranisha at 12:01, 21 September 2017

2017-09-21T12:01:50Z

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 | {{Back to Finance}}
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-| style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color:#000000;"><span style="font-size: 90%">'''[[SPIS_Toolbox_-_Credit_Policy:_Select/develop_Suitable_Financial_Instruments|►Go to the Next Chapter]]</span></span>
+| {{Next Chapter}}[[SPIS_Toolbox_-_Credit_Policy:_Select/develop_Suitable_Financial_Instruments|►Go to the Next Chapter]]</span></span>
 |}
 === '''<span style="color: rgb(135, 150, 55);">3. Credit Policy: Risk Analysis</span>''' ===
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 | {{Back to Finance}}
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-| style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color:#000000;"><span style="font-size: 90%">'''[[SPIS_Toolbox_-_Credit_Policy:_Select/develop_Suitable_Financial_Instruments|►Go to the Next Chapter]]</span></span>
+| {{Next Chapter}}[[SPIS_Toolbox_-_Credit_Policy:_Select/develop_Suitable_Financial_Instruments|►Go to the Next Chapter]]</span></span>
 |}{{SPIS Reference}}

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 === '''<span style="color: rgb(135, 150, 55);">3. Credit Policy: Risk Analysis</span>''' ===
-[[File:SPIS-in-India.jpg|thumb|right|300px|SPIS in India (Source: Lennart Woltering)]] Every SPIS demands a specific solution, since it combines a new energy providing technology with irrigation and cropping systems which can be manifold in its combination.<br/>
+[[File:SPIS-in-India.jpg|thumb|right|300px|SPIS in India (Source: Lennart Woltering)]] Every SPIS demands a specific solution with changing cropping pattern and the use of a comparatively newer technology like solar.<br/>
-Therefore, there are no standard “off the shelf” solutions, a thorough loan analysis is indispensable, especially when starting with this loan type.
+Therefore, there are no standard “off the shelf” solutions, and hence a thorough loan analysis is an important step, especially when starting with this loan type.
 Typical '''financial advantages '''when changing to solar powered irrigation could be:
-*higher profitability when introducing high value crops and higher degree of irrigation efficiency;
+*Higher profitability when introducing high value crops;
-*reduced and stable current energy costs due to change in energy source (no transport costs or risks for supply of fuel or lubricants);
+*Lower and more stable energy costs due to change in energy source (no transport costs or fuel/lubricant supply risks);
-*environmental friendly technology (avoid water losses, use of water saving technology, prevent diesel pollution, etc.) can give access to subsidized funds or grants.
+*Environment friendly technology (avoid water losses, use of water saving technology, prevent diesel pollution, etc.) can give access to subsidized funds or grants.
 SPIS, being based on agricultural activities, follow specific liquidity patterns, such as:
-*irregularity, seasonality;
+*Irregularity, seasonality;
-*farming-household mix;
+*Farming-household mix;
-*several cash generating activities;
+*Several cash generating activities;
-*system risks (climate, weather, pest, disease, prices).
+*System risks (climate, weather, pest, disease, prices).
 This requires specific agri-lending tools. Thereby the following risks should be considered:
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 '''Financial Risks'''
-*High initial capital investment requirements lead to higher credit risks resulting in longer repayment periods and higher interest rates for clients comparing to alternative energy sources;
+*High initial capital investment leads to longer repayment periods and higher interest rates for potential borrowers and thus higher credit risks compared to alternative sources. Other specific risks associated with agriculture.
 '''Technology Risks '''(see the following modules&nbsp;'''[[SPIS Design|DESIGN]]''', '''[[SPIS Set Up|SET UP]]''', '''[[SPIS Maintain|MAINTAIN]]''' for further details).
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 *Pumps have to be “oversized” in order to meet peak water demands;
 *Management capacities to handle the technology should be available;
-*Daily operating hours are limited;
+*Daily operating hours are limited leading to low asset utilization if not operated properly;
 *Suitability of location for SPIS;
 *Construction risk;
-*Over-use of water threatens long term cultivation as well as the environment.
+*Overuse of water threatens long term cultivation as well as the environment.
 '''Framework Risks'''
-*Long term availability of water and good groundwater management is indispensable; (see '''[[SPIS Safeguard Water|SAFEGUARD WATER]]&nbsp;'''module)
+*Since water is available at very low cost, long term availability of water and good groundwater management is indispensable; (see '''[[SPIS Safeguard Water|SAFEGUARD WATER]]&nbsp;'''module)
-*People involved – loan officers, producers, (gender!) technology and service providers, agricultural advisors;
+*People issues leading to delay in disbursal of subsidy, reluctance to lend or adopt solar pump technology etc.;
 *Theft or misuse.
 === '''<span style="color: rgb(135, 150, 55);">Outcome/Product</span>''' ===
-*Credit risk policy, considering thorough single case assessment, adequate portfolio management and pro-active closing of the information gap.
+*Credit risk policy considering the profile of the potential borrowers and adequate portfolio management.
 === '''<span style="color: rgb(135, 150, 55);">Data Requirements</span>''' ===
 *Specifics to agri-lending liquidity patterns of borrowers;
-*Asset structure of borrowers (potential for collateral);
+*Asset structure of borrowers (potential for collateral), especially land;
 *Cropping patterns and profitability of crop types (alternative markets and water availability);
 *Organization & management reliability (see '''[[SPIS Maintain|MAINTAIN]]&nbsp;'''module);
 *Technology risks (see '''[[SPIS Design|DESIGN]]''' module);
-*Re-financing options for the region.
+*Refinancing options for the region.
 === '''<span style="color: rgb(135, 150, 55);">People/Stakeholders</span>''' ===
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 *Consider SPIS specific risks with respect to their long term financing requirements, technological implications (cf. '''[[SPIS Design|DESIGN]]&nbsp;'''module), environmental impact (cf. '''[[SPIS Safeguard Water|SAFEGUARD WATER]]&nbsp;'''module) and framework conditions.
 *Assume manifold SPIS settings - there is no “off the shelf” loan analysis.
-*Minimizing risks can result in potentially high(er) transaction costs for all parties involved, compared to conventional pumping systems.
+*Generally, minimizing risks can often lead to high(er) transaction costs (except in a community based system) for all parties involved, compared to conventional pumping systems.
 <br/>
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 | style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color:#000000;"><span style="font-size: 90%">'''[[SPIS_Toolbox_-_Credit_Policy:_Select/develop_Suitable_Financial_Instruments|►Go to the Next Chapter]]</span></span>
 |}
-=== '''<span style="color: rgb(135, 150, 55);">2. Credit Policy: Risk Analysis</span>''' ===
+=== '''<span style="color: rgb(135, 150, 55);">3. Credit Policy: Risk Analysis</span>''' ===
 [[File:SPIS-in-India.jpg|thumb|right|300px|SPIS in India (Source: Lennart Woltering)]] Every SPIS demands a specific solution, since it combines a new energy providing technology with irrigation and cropping systems which can be manifold in its combination.<br/>

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 *Assume manifold SPIS settings - there is no “off the shelf” loan analysis.
 *Minimizing risks can result in potentially high(er) transaction costs for all parties involved, compared to conventional pumping systems.
+<br/>
-<br/>{{SPIS Reference}}
+{| cellpadding="1"

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 | {{Back to SPIS Toolbox 2}}
+|
-| {{Back to Get Informed}}
+| {{Back to Finance}}
+|
 | style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color:#000000;"><span style="font-size: 90%">'''[[SPIS_Toolbox_-_Credit_Policy:_Select/develop_Suitable_Financial_Instruments|►Go to the Next Chapter]]</span></span>

← Older revision		Revision as of 12:01, 21 September 2017
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	=== '''<span style="color:#879637;">Credit Policy: Risk Analysis</span>''' ===		=== '''<span style="color:#879637;">Credit Policy: Risk Analysis</span>''' ===