QUEZON CITY POLYTECHNIC UNIVERSITY

673 Quirino Highway Novaliches, Quezon City

FIDES MULTI-PURPOSE COOPERATIVE AUTOMATED LOAN PROCESSING AND

MONITORING SYSTEM

A Project Presented to the

Faculty of Information Technology Department

In Partial Fulfillment of the Requirements for the Subject

Information Management

Presented by:

CANERO, RAYMARK G

JAUM, SHUSMITA R.

PANO, MARY FAYE E.

PERALTA, ARGIE BEN A.

NOVEMBER 23, 2019

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

CHAPTER I

1.1 INTRODUCTION

A modern automated loan processing system has distinct advantages over legacy lending
systems. Using the latest cloud and web technologies, it is quickly implemented, configurable,
provides a superior customer experience, improves decisioning accuracy, and eliminates paper
documents. Automated systems accelerate all stages of the loan cycle. In a typical week, the user
receives hundreds to thousands of applications, yet only a percentage of them are right for user
lending strategy. Automated loan processing gives user the ability to quickly evaluate and identify
applications that meet user lending criteria, underwrite confidently, notify the borrower, and fund
the loan.
Replacing manual steps with automated decision rules, transforming paper into digital
format, and gathering performance data on all aspects of users lending practice. It can provide a
better experience to improve the speed and accuracy of loan application. Process a larger number
of loan applications with existing resources. Eliminate sources of human error for faster, better-
quality evaluation decisions. Establish predictable, repeatable, and auditable processes that
support compliance. Reduce delays and costs associated with paper processes. Analyze process
and loan performance with the goal of continually improving efficiency and profitability.
To be successful in a very competitive auto lending market, lenders must adopt modern
loan processing solutions. The automation technologies and capabilities incorporated in these
solutions give lenders big advantages in today’s market. Automated loan processing improves
applicant evaluation and loan decisioning.it eliminates manual steps that are best executed
digitally and allows human expertise to be applied where it works best.

Decision rules evaluates applicant/s attributes and provide immediate loan approval for
well-qualified applicant/s or declination for applicant/s who have no credit history, are underage,
or over-extend credit. Integration with credit data source and services lets lender/s automatically
and quickly verify applicant information. Decision rule flexibility can guide processing for exception
for applications, performing certain steps of the evaluation process automatically and delegating
more complex decisions to experienced underwriters.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

No lost or misplaced documents. Paper documents converted into digital images are
immediately and securely accessible by the underwriter, so they review applicant/s material so
quickly. The combination of decision rules and integration with credit data sources and services
lets lender/s automatically calculate optimum loan structures and terms. Decision rules provide
predictable, repeatable processes that remove the variations associated with human decision’s
and demonstrate compliance with lending regulations.

1.2 BACKGROUND OF THE STUDY

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of
financial assets over time, between the lender and the borrower. In a loan, the borrower initially
receives or borrows an amount of money, called the principal, from the lender, and is obligated to
pay back or repay an equal amount of money to the lender later. Typically, the money is paid back
in regular installments, or partial repayments, in an annuity, each installment is the same amount.
The loan is generally provided at a cost, referred to as interest on the debt, which provide
in incentive for the lender to engage in the loan. In a legal loan, each of these obligations and
restriction is enforced by contract, which can also place the borrower under additional restriction
known as loan covenant. although this article focuses on monetary loans, in practice any material
object might be lent. Acting as a provider of loans as one of the principal tasks for financial
institutions.
For other institutions, issuing of debt contracts such as bonds is typical source of funding.
Lending money is used by the lenders to decide on the risk and may even Impact the interest rate
that is offered. The purpose is, as the name implies, to reduce the interest rate, payment, and/or
overall term for mortgage. Nowadays it is so hard to earn money, the money you earn is not
enough for the daily expenses that a family needs like educational assistants and emergencies,
however this can be solved if you borrow some money to finance your daily need.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

The system has been introduced to notify the residence of Sto. Domingo Holy Spirit

Quezon City and Saint Joseph Tagapagtanggol Parochial School about the possible solution for

deficiency of money income. An automated loan processing and monitoring system is ideally

suited for the residence of Sto. Domingo Holy Spirit Quezon City and Saint Joseph

Tagapagtanggol Parochial School who wants to participate or borrow some money to the

company. Most importantly, they need to be capable of lending the desire amount of the

borrowers.

FIDES Multi-purpose Cooperative is typically an approachable organization, this

Cooperative is a community-based organization since 2008. These organization consist of

merchandising and lending services; it is a self-sustaining organization that responds to the needs

of members. FIDES MPC promotes the welfare of its members, officers and employees by

formulating a human resource development program and undertake a continuous education and

training seminars. As well as promoting financial opportunities for small entrepreneurs. They

provide security based on their contribution.

FIDES MPC offers an avenue for individual to share and invest their resources in the spirit

of social justice and equity. Their members believe in the ethical values of honesty, social

responsibility and care for others.

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

1.3 STATEMENT OF THE PROBLEM

Salary deficiency is one of the major problems of a family which cannot be prevented but
careful planning of the deficiency by borrowing money can often reduce the salary gap. During
the history many dramatic examples have been occurred, in this poverty many people suffered
from nutrient deficiency or stop from going to school. In addition, lots of this event in this area has
been occurred. The resulting deficiency can be minimized, and lives can be helped if the
residence living in this deficiency area are being help of this lending system.

1.3.1 General objective

The aim of the study is to develop a loan lending record management system about the role of
savings and credits in cooperatives in promoting access to financial services.

1.3.2 Specific objective

2. To Identify the problem and determine the solutions that has been encountered on the
Existing Systems.
3. To Analyze the needs of the end-user to ensure the new system can meet the expectation.
4. To design a new system that will satisfy the functional requirements of the proposed
system.
5. To develop a system that will:
 Serve as a database of loan records.
 Aid registration of loan records.
 Facilitate easy retrieval of loan records.
 Add SMS notification to the system that will used to alert the borrower of their
maturity date.
 Reduce the redundancy of data for loan records.
 Generate a complete information report/s of client’s records.
6. To test the Integration of the proposed system and to determine if the proposed design
meets the initial set of business goals.
7. To Implement the new system and replace the old system.
8. To add new capabilities that boost the performance of the new system.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

1.4 SCOPE AND DELIMITATION

SCOPE

The system will monitor members of the cooperative on paying their loans. The notification
of their deadlines to prevent complications in auditing at the end of the month. To know borrower’s
maturity date and generating reports. Also, in this system it has the information of client/members
of the cooperative.

DELIMITATION

The propose system is limited only to the residence of Sto. Domingo Holy Spirit Quezon
City that are members of the cooperative. The system will use only to process loans, verify
accounts of the clients/members loan and generate detailed information of client/members loan
records.

1.5 SIGNIFICANCE OF THE STUDY

This project will benefit the following people:

Cooperative Administrator. This will benefit the administrator to lessen their manual jobs.
Sto. Domingo Holy Spirit Quezon City Residents. This will benefit the residence in terms of
applying their loan and to have a better service.
FIDES Multi-Purpose Cooperative. This will benefit the organization in terms of Loan
Processing and Monitoring.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

1.6 DEFINITION OF TERMS

Automated- operated by largely automatic equipment.

Cooperative- involving mutual assistance in working toward a common goal.

Credit- the ability of a customer to obtain goods or services before payment, based on the trust
that payment will be made in the future.
Database- A collection of (usually) organized information in a regular structure, usually but not
necessarily in a machine-readable format accessible by a computer.

Information System- Any data processing system, either manual or computerized.

Interest-money paid regularly at a particular rate for the use of money lent, or for delaying the
repayment of a debt.
Lenders- an organization or person that lends money.
Loan- Loan is the lending of money by one or more individuals, organizations, or other entities
to other individuals, organizations etc.
Microfinance- is a category of financial services targeted at individuals and small businesses who
lack access to conventional banking and related services.
Savings- an economy of or reduction in money, time, or another resource.
System- is a collection of elements or components that are organized for a common purpose.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

2.1 FOREIGN LITERATURE

In a study of Kingsley O. et al. (2013) stated that the concept of automation has been
variously applied in most computing fields. This involves utilization of computing or electronic
devices to undertake the tasks that are being handled by people. It is a pertinent factor in a
profitable and soundly run financial institution. Financial transactions through manual system of
operation are prone to errors and unimagined complexities, making it so difficult a task
maintaining all entries of users account , search records of activities , handle loan deduction errors
and generate reports. Computers running automated system are targeted towards eradicating the
menace – hence making the underlying activities efficient and providing the fast response
needed.

In another study of While Dhar et al. (2009) describe a browser based automated loan
system includes a loan engine offered individually to financial institutions to set up , operate and
manage loan product offerings , a consumer website interface having a loan application form with
data fields relevant to the loan product offerings, a designer component that establishes tasks in
the form of a loan process checklist associated with each loan product offering, and a workflow
engine for automatically evaluating the loan application form using the applicable loan process
checklist in conjunction with rules , logical mathematical computational components , and risk
based offer configurations for generating an instant loan offer when a borrower qualifies.

According to the great Greek philosopher Aristotle has openly expressed his opposition
against Money Lending on interest. He says “Money maybe a useful instrument of exchange but
when it temps people to pile up unused gains or accumulate wealth by lending money, it is sterile
or unproductive and it promotes disparity in riches and financial irregulates.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

A nigrian nationals name I.A Ekpo and O.J Umin on their writings in “the informal sector”
they stated that in Nigerian there are also informal money lenders, savings and credit associations
and credit unions. Money lenders are believed to be highly exploitative with high rates of interest
through which they extract economic surplus provided by peasant labour, capital and land. The
savings and credit associations as well as credit unions operate in more formalized ways than the
esusu associations.

According to Eugene Mutura, in kagali on her write up about informal money lending, he
states that “That illegal money lending has high side effects because it affects property and
individual’s security as well as crippling the nations company”.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

2.2 LOCAL LITERATURE

The Regulatory Framework for Microfinance (RFM) in the Philippines formulated

by the Department of Finance [DOF] (2000) strongly supports the current government’s fight
to alleviate poverty. There are urgent needs of the people who do not have the basic transaction
facilities particularly the non-salaried workforce. In so doing, the RFM advocates tightening
of the regulation for the commercial micro-lending sector so the people could do away
from over-indebtedness. The regulations include the strategies that redress the power of the
lenders over the borrowers. On the other hand, the benchmarking Philippine MFIs (2005)
stressed that the Philippines has a well-defined policy and regulatory architecture for
microfinance which enabled microfinance institutions to improve the living conditions of
hundreds of thousands of low-income Filipinos.

Past government initiatives for poverty alleviation from the 1960’s to the 1980’s were
focused on direct credit and guaranteed programs which provided massive credit subsidies
to bring down the cost of borrowing for target sectors. These programs resulted in very
limited effectiveness in outreach and brought about a great cost to the Philippine government’s
budget (DOF, 2000). The problems pertaining to massive repayments were not met; funds were
captured by large scale-borrowers; mobilisation of deposits was neglected and a huge fiscal
cost for the government was experienced (DOF, 2000).

According to Feliciano R. Fajardo “in general informal money lenders charged much
higher interest rates than banks and other lending institution. Those of them who charged very
high interest rates are called “users or loan sharks” their victims are always the poor people who
are not qualified to borrow for banks according to him there are two kinds of financial institution.
They are formal financial institution. They are formal financial institutions are licensed lenders,
example are banks etc. the informal financial institutions are unlicensed money lenders, who
charged much higher interest.

In depth by Manny Canto. In negros opinion, on his article he states that “it is an open
secret that these Indian nationals are doing business all over the Philippines and their business
all over the Philippines and their business is within the ambit of the economy. According to his
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

research “Underground Economy: refers to the part of the economy refers to the part of
the economy that generates income but goes untaxed.

Sun star, Cebu according to Godofredo M. Roperos “Money lending among those
whom those banks, would never extend a loan to, and those who believe borrowings from the
banks is a lot of paperwork and red tape, is a highly lucrative business operation. Able it a lot of
hard works, sacrifice and patience. Interest, I think it is well worth their sacrifice and patients. This
kind of lending that is all over the rural areas is operated only by the so-called “Bombay” or the
Indian nationals.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

2.3 FOREIGN STUDY

A study was made by R.Sivalingam [1970] namely “An Enquiry Into The Extent And
Causes Of Overdues In The Agricultural Credit Societies In Kadanad Panchayat Area”. This study
revealed that overdues were due to various factors. The main factors were [i] Crop Failure [ii]
Borrowings From Money Lenders and [iii] Size Of The Family.

A study team was appointed under the chairmanship of C.D. by the RBI December, 1972
to study the position of overdues at various levels of the three tier cooperative credit system and
to ascertain the causes. It has stated that inefficiency of the management is one of the important
causes for poor recovery and suggested that there should be many controllable causes, such as
timely disbursement of loans, timely recoveries, minimization of lengthy procedures, etc.

The study according to the Asia Development Outlook, “Informal money lenders can be
categorized into four division: intermittent lenders, united credits, tied credit and group finance.
The result study commissioned by the consumer council and the FIJI institute of Applied Studies
(FIAS), found among other things , that there was a relatively significant demand for credit by
urban and pre-urban households that commercials banks could not satisfy for many reason, which
includes the lack collateral.

The Wulan on the states in his study that informal money lending, informal credit in supply
of formal credit in developing countries. Despite an increase in supply of formal credit in rural
areas, informal lenders remain the dominant source of credit for the poorest households.
Improvements of productivity are in important in a development process. Productive investment
requires funding and the access to credit us crucial for the purpose. Credit might also be a mean
tide over bad time cause by the illness or an upcoming wedding for poor individual. previous
studies of the informal credit market demonstrate extremely high informal interest rates charged
on loans to poor individual order to make policies that can positively affect poor people’s living
conditions; we must understand how informal lenders set the interest rates.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

2.4 LOCAL STUDY

In a study there are two Indian communities – Sikh and Sindhi. Many so-called “Bombay
5-6s” belong to the Sikh community. (It is said that Sikhs copied the money lending activities
conducted by the Sindhis.) Not knowing the difference between the communities, Filipinos often
believe that many Indians in the Philippines are in the 5-6 business, and the words “5-6” and
“Bombay” are frequently used interchangeably to point out people of South Asian origin. Both
words have negative implications.

A study of The Securities and Exchange Commission (SEC), continues to stamp out
illegal lending activities with another cease and desist order covering six online lending operators.
The Commission en banc issued the order on October 24, enjoining the operators and owners of
Batis Loan, Happy Credit, Easy Cash, Wahana Credit & Loan Corp., PesoMaMa and Light Kredit
to immediately cease and desist under pain of contempt from engaging in, promoting and
facilitating unauthorized lending activities.The order extends to the agents, representatives and
promoters, the owners of the hosting sites and all persons acting for and on behalf of the online
lending operators.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno says the Monetary Board could
consider setting a cap on interest rates and other charges of lending and financing businesses
before the year ends. THE BANGKO SENTRAL ng Pilipinas is considering the imposition of a
cap on interest rates and other fees that lending and financing companies charge on consumer
and payday loans, in response to a request by the Securities and Exchange Commission (SEC).
In a statement. the country’s corporate regulator said it wrote to BSP Governor Benjamin E.
Diokno on Oct. 8, asking for a limit on interest rates, fees and other charges that lending, and
financing companies impose on borrowers. In that letter, SEC Chairman Emilio B. Aquino cited
high interest rates that reach 2.5% per day, on top of other fees and charges, as among
complaints that the SEC receives. “Thus, the Commission respectfully requests the BSP to
consider putting a ceiling on the interest rates, charges, and other fees… The proposed ceiling
rates shall not apply to the whole financial sector, but solely to consumer loans and payday
loans…,” Mr. Aquino was quoted as saying in the letter.In a mobile phone message, Mr. Diokno
said he has “already instructed our senior staff to study the matter.”Asked when the BSP could
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

give a definite response to the SEC, Mr. Diokno replied: “… [I] think end of November is a
reasonable deadline, then I can bring it up with the MB (Monetary Board).”

In study IMPACT OF MICROFINANCE ON RURAL HOUSEHOLDS IN THE

PHILIPPINES(February2008). The study of the Rural Microenterprise Finance Project (RMFP)
in the Philippines. RMFP aimed to support efforts of the Government of the Philippines to
strengthen rural financial institutions by assisting organizations that employed the Grameen Bank
Approach (GBA) in providing credit to the poor. The project was implemented by the People’s
Credit and Finance Corporation (PCFC) and funded by the Asian Development Bank.
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

CHAPTER III

3.1 DESCRIPTION OF THE EXISTING PROGRAM

FIDES-MPC hold a different type of loans all the reports of loans are to be submitted to
their board of directors. The manager transfers generated reports that came from their system
into another spreadsheet the manager manually separates every types of loan and create a new
report to be submitted to their BOD. That’s why the existing system is time consuming because
it can’t generate the specific information for the specific type of loans that the BOD need. At the
same time the existing system doesn’t have a notification that tells the lenders that the maturity
date is coming. So, the manger didn’t know that the maturity date of lender has come.

CONTEXT DIAGRAM
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

DATA FLOW DIAGRAM

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

CHAPTER IV

4.1 DESCRIPTION OF THE PROPOSED SYSTEM

The proposed system is to create an Automated Loan Processing and Monitoring

System that will improve loan process by providing an automated , systematic and accurate
loan processing cycle that is error free , efficient and updated real time.

The proposed system will generate a complete information report/s of clients records. It
serves as a database and can facilitate easy retrieval of loan records. Also reduces the
redundancy of data to have a manageable system. The most important in this proposed system
is to add SMS notification that will used to alert the borrower of their maturity date.

4.2 CONTEXT DIAGRAM

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

4.3 DATA FLOW DIAGRAM

4.4 DATA DICTIONARY

4.4.1 BORROWERS TABLE

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

4.4.2 COLLECTORS TABLE

4.4.3 INTEREST RATE TABLE

4.4.4 LEDGERS TABLE

4.4.5 LOAN TABLE

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

4.4.6 REMITTANCE TABLE

4.4.7 USERS TABLE

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

4.5 ENTITY RELATIONSHIP DIAGRAM

 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City

PROGRAM FLOWCHART

FORM SPECIFICATIONS

REPORT SPECIFICATIONS
 QUEZON CITY POLYTECHNIC UNIVERSITY
673 Quirino Highway Novaliches, Quezon City