BILL ADONGO

                                                      PERSONAL MEMORANDUM

To International Commercial Bankers

From Bill Adongo.

Date:18^th January, 2014.

The cornerstone of Banking, Credit Unions and Loan Companies are credits. They can operate only as long as they have the public confidence, The uniqueness of Banks related to other financial institutions lies not the asset side but on the credit side. Today banks and credit institutions lend billions of cedis to the governments and provide billions of cedis of credit for consumers.

When a bank sells goods and services there are strictly two ways to be considered, either it can be paid in cash immediately or waited for a time to be paid, that will extend credit to customers. These two factors prompt me to set out two alternative credit strategic, either the bank can offer credit so that the probability of payment should be less than one(=1) and the cost per unit less than price per unit. Or the bank refuses credit, so that the probability of payment equal to one(=1) and the cost per unit equal to price per unit. I have hypothesized about five decisions of granting credit and these are:

1) delayed revenues=(1+r_R)NPV/2H.

2)The immediate cost=NPV/2.

3)The delayed expected cash inflows= H_*(1+r_R)_*NPV/2H

4)The probability of payment=H<1

5)The rate of return.

These underline decisions above enable banks to operate effectively without financial crises and without cheating. This model of mine is genuine model and it favors both the creditors and debtors.

I would like all the bank or creditors in various banks and credit unions to know my experience and attach their experience, so that we can know how this model can be applied practically in banks credit unions.