Revision as of 08:53, 4 April 2018 by ***** (***** | *****)
Module Aim and Orientation
Financing solar-powered irrigation can be an opportunity for financing institutions seeking to diversify their loan portfolio and expand their range of financial products. The INVEST module focuses on product features for SPIS loans, considering direct financing by financial institution to a small and medium-scale agricultural end borrower.
The module also points out how it is different from financing conventional irrigation systems. It provides guidance to financial service providers already financing or planning to finance SPIS. It thus addresses two groups:
- stakeholders at management level who decide upon credit policies of a financial service provider.
- loan officers who assess single loan applications for financing SPIS.
Three steps are elaborated in the INVEST module to support the process of defining the financial service provider’s credit policy on management level: First the analysis of the potential of the SPIS market segment; secondly the determination of general credit risks involved; and thirdly, the design and test of suitable financial instruments.
For the specific individual loan assessment process on loan operations level, three main steps are elaborated: First, the determination of the financing volume and calculation of the profitability of the investment; secondly, the assessment of credit risk and collateral of the potential borrower; and finally, the determination of the cash flow and the repayment plan for the single potential client, along with loan conditions.
1. Basic decision-making tools
2. Credit policy: Analyze potential
3. Credit policy: Risk analysis
4. Credit policy: Select/develop suitable financial instruments
5. Loan assessment: Determine financing volume and profitability
6. Loan assessment: Assess credit risk and collateral
7. Loan assessment: Adjust repayment plan to cash flow
Annex - Collection of Formulae