Case: You are currently working as a loan officer with Riba International Bank. Your bank customer Roger Samprasi is a 40 years old man, married, with four children. He has maintained an account in good standing with your bank for the last 3 months. He is trying to set up a meeting with you regarding a proposal for a business loan. Roger has worked for the last 20 years with a local construction company as a site manager. He is looking to buy a small company from a local resident who declared bankruptcy. Roger thinks that he could use his extensive experience to get the business up and running again and make good profit. The business will be sold to him for BD15,000 and based on Rogerss estimation, it would need another BD 3,000 for working capital. All of this money will borrowed from the bank.

a) Using the seven point approach of the canons of good lending, decide whether you as the lender would approve Rogers loan? Explain in detail and methodically.

b) How would the use of credit scoring models such as the FICO scorecard assist you in making a credit decision?