Loan and Credit Policy
Loan Policy
All major loans must be obtained from the most cost-effective sources, ensuring compliance with existing loan covenants, agreements, and commitments.
Loan amounts shall not exceed the limits set by board resolutions. The Board of Directors and the General Manager review these limits annually, and the General Manager may propose adjustments during the year, pending Board approval. To ensure the availability of adequate and affordable funds and credit services, the cooperative will utilize diverse capital sources, including the Cooperative Credit System and other financial institutions.
Handling Delinquent Accounts
The Credit Committee, together with the General Manager, will periodically review accounts receivable.
Delinquent notices will be issued to members with overdue accounts in line with the credit policy.
Accounts receivable outstanding for more than a month may be escalated to the MPPCC’s Attorney for collection or legal action against the member’s shares, with Board consent. Such actions may result in the suspension of membership privileges, adhering to the Cooperative Code and relevant laws.
Types of Loans
Regular Loan: Members may borrow up to 100% of their paid share capital, less any existing loans.
Emergency/Calamity Loan: Provides financial assistance for emergencies such as family deaths, serious illnesses, or calamities, with a maximum amount of PHP 10,000, repayable within one year based on the borrower’s payment capacity.
Credit Lending Policy
The Board of Directors governs the cooperative’s lending policies, promoting safe and responsible lending that protects member savings and cooperative assets. These policies may be revised as needed.
The Credit Committee assesses all loan applications and forwards approval recommendations to the Board. The Board may allow the General Manager or other staff to handle loan processing under specific conditions, subsequently reviewed by the Credit Committee.
Credit Procedure for Regular Loans
- Loan applications are processed on a first-come, first-served basis.
- The interest rate for regular loans is set at 18% per annum, calculated using the diminishing balance method.
- Loan processing fees are structured as follows:
- PHP 100 for loans up to PHP 10,000
- PHP 250 for loans from PHP 10,001 to PHP 20,000
- PHP 500 for loans over PHP 20,000
- A force savings deduction of PHP 500 is applied.
- For loans exceeding PHP 20,000, a capital build-up fee of 1% of the loan amount or PHP 1,000 (whichever is higher) is automatically added to the borrower's shares.
- Amortization periods range from 12 to 60 months, depending on the loan amount.
- Members must have a minimum take-home pay of PHP 5,000 per payday to qualify. A co-maker may be required if the borrower does not meet specific requirements.
Interest on Loans
Interest rates are determined by the Board and may vary by loan type:
- Regular MPPCC Loan: 18% diminishing rate
- Emergency, Educational, Multi-Purpose Loans: Rate set by the Board
Procedure for Loan Application
- Members must submit a loan application along with their recent pay slips at the MPPCC Office.
- Additional documentation and clearances from the club may be required for some loan types to verify other liabilities.
- Loan approvals are contingent on a majority signature from either the Credit Committee or the Board of Directors.
- Approved loans are processed and checks are issued within one week of approval.
Policy on Loans Requiring Co-Makers
- The liability of a co-maker reduces their available loanable amount.
- The Board of Directors addresses and resolves issues involving co-makers as necessary.