Financing and Repayment of Landbank Livelihood Loan of Government Employees in La Trinidad, Benguet.

Abstract

This study was conducted in La Trinidad, Benguet from January to February 2015 to determine the profile of the livelihood loan of Landbank, loan repayment practices of the borrowers, problem encountered by the borrowers, causes of loan delinquency and alternative measures to improve credit repayment performance of loan borrowers. The data were gathered through survey questionnaires among the 30 employees from the different government agencies and units. Majority of the respondents are of middle age, female, and married. Many of the borrowers used their loans as capital for their business, for house improvement and for education of their children. The requirements in borrowing included a certified photocopy of cedulla, TIN card, statement of salary, and promissory note. The Landbank livelihood loan offered only 2 years loan maturity. The loan is payable in two years with 14% interest rate per annum and is released in full cash upon approval. The findings revealed that most of the respondents paid their loan through the agency collector or salary deduction. In addition, it is paid periodically through monthly installment including principal and interest. The source of fund for repayment was solely from their salaries. With regards to loan application and release, some problems were encountered such as many requirements to accomplished, limited loanable amount and delayed release as caused by delayed processing and approval of loan. Moreover, some of the respondents were not able to pay their loan on time and they claimed that this was caused by the following factors including diversion of loan to other purposes, short payment period and insufficient money during collection time. Further, to improve credit repayment performance many of the respondents suggested that if possible Landbank should directly communicate with the borrower regarding their credit balances and due date using letters, SMS or phone call. Another is the conduct of orientation or credit counseling relative to the Landbank livelihood loan policies.