homepesa sacco society limited · 2016 homepesa sacco society limited loaning policy this document...

2016

HOMEPESA SACCO SOCIETY LIMITED

LOANING POLICY

This document shall be used as a guide for effective credit management for the society

2016

Homepesa SACCO Society Limited

Loaning Policy

TABLE OF CONTENT

TABLE OF CONTENT ................................................................................................................... 2

Chapter 1 INTRODUCTION ......................................................................................................... 4

1.1 Background ............................................................................................................................. 4

1.2 Regulations.............................................................................................................................. 5

1.4 Availability of the Credit policy ..................................................................................................... 6

1.5 Confidentiality ............................................................................................................................... 6

Chapter 2 CREDIT POLICIES ........................................................................................................ 7

4.9.1 Definition............................................................................................................................. 7

4.9.2 Purpose of credit policy ...................................................................................................... 7

4.9.3 Guiding objectives of credit policy ...................................................................................... 7

4.9.4 Areas of lending .................................................................................................................. 7

Chapter 3 LOAN PRODUCTS ....................................................................................................... 8

4.9.5 Loan Types........................................................................................................................... 8

Chapter 4 CREDIT MANAGEMENT ............................................................................................. 9

4.2 Loan Application ..................................................................................................................... 9

4.3 Loan Appraisal ....................................................................................................................... 10

4.4 Loan approval/ Rejection ...................................................................................................... 10

4.5 Disbursement ........................................................................................................................ 11

4.6 Loan repayment .................................................................................................................... 11

4.7 Loan security ......................................................................................................................... 11

4.8 Collaterals…... ........................................................................................................................ 12

4.8.1 Types of Guarantees .............................................................................................................. 12

4.8.2 Guarantee Appraisal .............................................................................................................. 12

4.8.3 Other Aspects on Guarantees ................................................................................................ 13

4.9 Collateral Management ......................................................................................................... 15


Loaning Policy

4.10 Insurance on Guarantees ....................................................................................................... 16

4.11 Reports .................................................................................................................................. 17

4.12 Default management ............................................................................................................ 18

6 Loss of a member ...................................................................................................................... 19

7 Loan loss provision and write offs ............................................................................................. 19

8 Credit committee ...................................................................................................................... 19

4.9.8 Credit committee meetings .............................................................................................. 20

4.9.9 Delegation ......................................................................................................................... 21

Chapter 5 SAVINGS................................................................................................................... 21

5.1 Savings mobilization .............................................................................................................. 21

5.2 Withdrawal of savings ........................................................................................................... 21

Chapter 6.0

ADOPTION .......................................................................................................................... 22


Loaning Policy

Chapter 1 INTRODUCTION

1.1 Background

In Homepesa SACCO society is a SACCO that leverages on technology to offer value and

convenience to its members. The society shall endeavor to offer unique value proposition

to its customers by providing highly differentiated and personalized services based on

personal preferences, Income levels and spending habits.

The society shall seek to integrate its services with the core banking and other money

transfer applications to supplement other existing channels in order to give members

seamless experience of its products and services.

Loans constitute a major business activity and is expected generate a bigger percentage of

the society’s income and equally, taking up a large proportion of the management’s time.

There is a potential of an error or irregularity in this area which may expose the society

to a risk of losing its resources through the borrowers’ failure to repay the loans.

The implication of the above would be either the understatement of loans advanced to

members, wrong management accounts, loss of finance to the society and ultimately

accounts that may not give a true and fair view of the society’s loan balances at any one

given point.

This therefore, calls for thorough management of loans in order to ensure that the risk of

non-full repayment of loans is eliminated completely. This policy is therefore aimed at

addressing the above and serves as an informative tool for both members and officials of

the society.

Registration

To register with Homepesa Sacco, visit www.homepesasacco.com and click on the Sign Up button. Enter your details and click Sign Up. You can also sign up by downloading the Homepesasacco Android application on play store.

Your account will be created on our platform after registration. Proceed to make the payment for a non-refundable activation fee of Ksh 200 by using either Mpesa or debit/Credit card.

The activation fee will be used to verify your registration details using platforms such us the government's IPRS or other sources of data that are deemed fit for this requirement. Please note that when using debit cards, some banks such as Cooperative Bank of Kenya will require you to activate your card for online payments. Once you pay, your account will be reviewed and activated by our staff. Upload a soft copy of your national id/passport (both sides for ID) and passport size photo.

http://www.homepesasacco.com/


Loaning Policy

To operate a withdrawable account, you do not require to pay the membership fee. This account will enable you to deposit and withdraw cash at will, buy airtime, transfer to savings and transfer cash to other members.

However to operate a savings account, you will be required to pay a non-refundable membership fee of Ksh 1,000. The savings account enables you to access loans that are three times your savings according to our loan policies.

Please note that the activation fee and membership fee are NON-REFUNDABLE. Your savings are refundable upon making a decision to deregister from the Sacco. Shares are only transferable to another member of the Sacco.

NOTE: Being a Sacco, members partly own the Sacco. You will purchase shares at will that will enable you get dividends at the end of every financial year based on the Sacco's profits. When making your first savings, minimum shares of Ksh 100 are deducted towards the shares.

Savings & Loans

To access an emergency/instant loan, your account must have been active for at least three months. To access development loans, your account needs to have been active for at least 6 months. Unsecured loans do not require a guarantor or security and must be less than or equal to your savings.

You will be able to access a secured loan that is three times your savings. You can secure your loan with either guarantors who are members of Homepesa Sacco and whose savings add up to the amount of loan that you need or have a security such as car log book or land title deed.

Please note that you can only guarantee someone a maximum of your savings less the amount already guaranteed. Your loan interest will depend on the payment period.

Deposits & Withdrawals

You can now operate a withdrawable account that allows you to deposit cash, withdraw cash, buy airtime, transfer to savings, transfer to other members among many other functions. In the near future you will also be able to pay bills such as electricity, water and many more.

1.2 Regulations

This credit policy is within the guiding laws and rules which are contained in the:

Co-operative Societies Act Cap 490 laws of Kenya.

Co-operative Societies Rules (2004)

Legal notices and commissioner’s circulars.

Homepesa SACCO Society By-laws


Loaning Policy

1.4 Availability of the Credit policy

The policy or sections of the policy are not available for external distribution. It is freely

available to management, Credit Committee and members.

1.5 Confidentiality

The management committee shall take the utmost care in the security and safekeeping of

loan documents. All information provided by a member of the society must be kept in the

strictest confidence.

Chapter 2 CREDIT POLICIES

4.9.1 Definition

This policy is a guide to action and provides procedures and guidelines on how Homepesa

SACCO society should handle or manage its loans. The policy addresses the loan

processing and in particular member qualification, application, processing, approval,

disbursement, administration, collateral management, monitoring and delinquency

management.

4.9.2 Purpose of credit policy

The purpose of this policy is therefore to:

a) Be used as a guide when processing loans;

b) Document standard ways of loan administration and other credit programmes;

c) Eliminate misunderstanding and certain errors of omission which are likely to occur during the credit administration

4.9.3 Guiding objectives of credit policy

The society’s credit control objective is to ensure the proper functioning of the loans

management as follows:

a) Loans are given to bona fide members only;

b) Loans are properly appraised and approved;

c) Disbursement of loans is done as per approval terms and conditions;

d) Interest income is collected and recognized in the accounting period that it is

earned;

e) Proper records on loans are kept;


Loaning Policy

f) There is effective monitoring and control;

g) Loans are well secured;

h) Adequate provisions are made for bad and doubtful debts;

i) No loan shall be granted for any illegal business or anti-social activities.

4.9.4 Areas of lending

Loans are only given for provident and productive activities that are geared

towards improving of life of our members eg.

a) Development;

b) Education;

c) Asset acquisition;

d) Securities purchase;

e) Emergencies;

f) Domestic consumables.

Chapter 3 LOAN PRODUCTS

3.1 General Lending Policies

a) A variety of loan products shall be offered that serve the needs of members and

are competitive in the market. From time to time new products shall be

developed after a research has been done and demand established.

b) A member shall be allowed to run only one loan product in each category at a

time, i.e., there will be no new loan before the existing loan is fully paid.

c) The total loan deductions for a member shall not exceed 2/3 of his/her gross

pay

The applicant must adhere to the waiting period set by the management committee from

time to time.


Loaning Policy Page 10

4.9.5 Loan Types

Products Interest

rate (pm)

Repayme

nt period

(months)

Limit

Amount

(Kshs)

Qualifying

shares

Repayme

nt

method

Turnaro

und

time

Supporting

documents

Purpose

Development 1% 30 500,000 3X

Deposits

less Out.

Loan

Check off/

Direct

Debit

30days Nil Develop

ment

purposes

Super

Development

1.2% 48 1m 3X

Deposits

less Out.

Loan

Check off/

Direct

Debit

30days Nil Develop

ment

purposes

Emergency 1% 12 70,000 3X

Deposits

less Out.

Loan

Check off/

Direct

Debit

Weekly Proof must

be attached

Medical,

Death,

court

fine/

Bond,

Theft

Instant 4% 3 30,000 3X

Deposits

less Out.

Loan

Check off/

Direct

Debit

Weekly Nil Develop

ment

purposes

School fees 1% 12 150,000 3X

Deposits

less Out.

Loan

Check off/

Direct

Debit

30days School fees

invoice/

structure

School/

College

fees

Refinancing 6% of the

outstandi

ng loan

balance

Depende

nt on the

loan

product

Depend

ent on

the loan

product

3X

Deposits

less Out.

Loan

Check off/

Direct

Debit

30days Nil Develop

ment

purposes

4.9.6 Pricing of Loans


Loaning Policy

Interest rates on all loans, fees and commission shall be determined by the management

committee and approved by the Annual General Meeting. Where the society has borrowed fund

from external sources for onwards lending to members, the rate of interest applied shall not be

less than 2% above the cost of borrowed funds.

Chapter 4 CREDIT MANAGEMENT

4.1 Requirement for qualification of loans

a) A member must have completed at least three months’ active membership.

b) The loan amount shall be based on a multiplier of the member’s savings in the Society

which shall be determined by the management committee from time to time and approved

by the AGM.

c) Any boosting of savings by a member shall only be considered for a loan after two months.

d) A member who withdraws from the society and rejoins later will be treated as a new

member for the purpose of this loan policy.

4.2 Loan Application

a) A member applying for a loan should undertake to pledge future salary, benefits and

terminal dues from the employer where applicable towards loan repayment before the

society grants such a loan.

b) All applications for loan shall be made on prescribed forms and shall in each case set out

the amount applied for, the purpose of the loan, terms of repayment and type of security

required. The loan application form must be fully completed, endorsed by the company and

supported by 2 recent pay slips where applicable.

c) False information on application form shall lead to automatic disqualification and shall

constitute an offence as per the Homepesa SACCO Society by-laws.

d) Loan applications shall be considered in order in which they are received. In event that

funds are inadequate for all the applications the management shall decide on the

preferred criteria to use.

4.3 Loan Appraisal

a) Once loan applications have been received at the society, they shall be recorded in an

applications register and keyed into the computer system.


Loaning Policy

b) The credit sub-committee shall appraise the applicant to determine whether they qualify

for a loan or not and how much.

c) All loans shall be subject to the 2/3 rules i.e. all loan deductions including statutory

deductions shall exceed 67% of the applicants gross pay where applicable.

4.4 Loan approval/ Rejection

a) All loans shall be approved by the credit committee with exemptions being referred to

the management committee.

b) No member of the loan approving committee shall be present when his/ her loan is being

considered.

c) Loans shall be approved based on Character, Capacity, Capital, Conditions and

Collateral.

d) The credit committee shall approve loans based on a simple majority.

e) The repayment period shall be a maximum of the period dictated by the product

features but in all cases shall not exceed maximum ceiling at any given time.

f) Members will be informed immediately the decision has been passed on the fate of their

applications and reasons for passing such decisions.

g) If a member is not satisfied with the decision passed by the credit committee, such a

member will be free to submit a written appeal to the management committee within

fourteen days from the date a decision was passed by the credit committee.

h) When a loan is approved, the credit committee shall inform the member when the loan is

likely to be disbursed.

4.5 Disbursement

a) No new loan shall be disbursed before all existing similar loan types are paid off;

b) A loan shall be disbursed when all security documents have been completed, signed,

acknowledged and in place at the society’s registered office.

c) The society may use electronic funds transfer into the member’s bank account or cheques

as the mode of disbursement.

d) A loan may be released earlier than the stipulated waiting period upon payment of an early

release commission which would be determined by the management committee from time

to time.

4.6 Loan repayment


Loaning Policy

a) Deductions for loan repayment shall commence not later than the month following that in

which the loan was paid to a member.

b) A member may repay his/ her loan and interest in whole or in part prior to its maturity.

c) No member should suffer total deductions (including savings, loan repayment and interest)

in excess of two thirds of his/ her regular monthly salary.

d) A member’s savings pledged as security for another member’s loans shall not be

surrendered to offset his/ her outstanding loan, unless the former can provide alternative

guarantorship/ security.

e) Loan repayment period may not be extended beyond the period the member specified in

the loan application form, without notification to the guarantors and approval by the

management committee.

4.7 Loan security

a) All loans shall be fully (100%) secured.

b) The management committee shall ensure loans held by members are insured by a reputable

firm

c) The obligation of the previous guarantors shall cease upon completion of loan repayment or

change of guarantors subject to the new guarantors being accepted by the society. The

obligation of the guarantors shall reduce progressively as the loan balance decreases and

shall cease when the loan guaranteed is equivalent or less than the loanee’s savings.

4.8 Collaterals

For all loan transactions, the SACCO shall require a guarantee as backup which may be a pledge,

mortgage, cash collateral and others as permitted by law.

As a minimum, an updated personal situation statement shall be available in which the

ownership of their main assets and the origin of their income are justified by documents.

4.8.1 Types of Guarantees

The Credit Committee shall determine, according to the nature of the credit, and recommend on

the approval of guarantee in order to give adequate coverage to the lending risk.

Listed below are the main types of guarantees the SACCO can accept to back up its lending


Loaning Policy

transactions:

a) Signature Guarantee

This shall consist solely of the signature of one or more individuals or legal entities of recognized

creditworthiness and integrity who must be members of the society. A duly signed ID photocopy

shall be attached /submitted where such is the case.

b) Collateral Pledge

That constituted by personal property and under the loan conditions it shall be determined

whether it can move based on its nature and pursuant to what is determined by the SACCO.

A lien shall be established with this guarantee.

c) Collateral Mortgage

That constituted by real property by means of the establishment of a mortgage lien in the name of

the SACCO as a first mortgage.

d) Cash Collateral

That consisting of cash monetary amounts either in national or foreign currency. Negotiable

instruments, insurance policies, Fixed deposits etc

4.8.2 Guarantee Appraisal

Prior to the acceptance of a collateral pledge or mortgage, they must be appraised. This appraisal

must be performed by qualified personnel who may be external to the SACCO, to which end it

shall be required that said personnel must meet all of the requirements necessary to perform

their duties, or by the SACCO’s in-house staff, with approval for this appraisal by the Management

Committee necessary in both cases.

For the appraisal of guarantees, the SACCO must:

i. Qualify the valuers of collateral- property valuers, motor vehicle valuers.

ii. Have consultants approved by the Management Committee.

iii. The loan amounts must not be disclosed to the appraisers before they perform the

appraisals.

iv. The appraisal reports must be delivered to the SACCO without their being made


Loaning Policy

known to the borrower.

v. The appraisals are subject to review by the SACCO if this is considered necessary.

vi. The costs incurred in the appraisal shall be covered by the members, subject to the

authorization and granting of the loan.

vii. Prior to the consideration of the requested loan, the SACCO must collect the costs

incurred in the appraisal process.

4.8.3 Other Aspects on Guarantees

a) The borrower must prove that the property belongs to them legally authorized by the owner to

encumber it, by submitting the documents indispensable to accredit him such as: certificates from

the property registrar or notarized power of attorney, as the case may be.

b) When the guarantee consists of machinery and equipment, in the legalization document each

machine (description, model, serial number, motor and chassis number, etc.) must be itemized,

their condition with the value assigned to each one, and the legal representative of the SACCO must

be appointed by means of a private contract as the depository of said machinery and equipment.

c) In cases of pledged inventories, they shall also be itemized in the legalization document and the legal

representative of the SACCO designated as their depository.

d) When the guarantee consists of trust documents, they must be signed over to the SACCO by the

member and subsequently this endorsement must be noted in the records of the authorized

institution that issued it. This shows that the SACCO will have document where collateral is

registered and monitored from time to time. In addition the movement of collateral should be

tracked and changes noted in the record.

e) A member can be granted a loan without guarantor(s) if it does not exceed 70% of his/her Shares-

Deposits/non-withdrawable Shares (Share Capital) and has not guaranteed any loan

f) No member will be allowed to guarantee more than five times his/her Shares- Deposits at any given

time. The society shall maintain a register to ensure this requirements is not violated

g) All guarantors must be members of the society in good standing and acceptable by Credit

Committee.


Loaning Policy

h) No member of Executive Officers or any Management Committee or employee shall act as

an endorser or guarantor, for borrower from the society

i) A borrower or a guarantor may apply to the Credit Committee for a change of guarantors

j) The obligation of previous guarantors shall cease upon change of guarantors subject to the

new guarantors being accepted by the society. The obligation of guarantors shall also cease

when the loan guaranteed is fully paid, reduced to or less than the borrowers shares-

deposits in the society. The society shall maintain a record of all guarantors to every loan in

each member’s file

k) The society shall require a borrower who has no check off facility to provide extra security

for loan. The priority of such security will be 60% surrender value of an insurance policy, 50%

market value of stock quoted in the stock market, 60% value of motor vehicle

comprehensively insured, full value of treasury bonds and other negotiable instruments

certified by the Management Committee

l) Other security: Mortgage in real estate can be taken as security for a loan not exceeding two

thirds of the mortgage value.

m) The Credit Committee shall require those applying for loans to produce 100% full security for

All Loans. The SACCO will accept the following as loan security:-

Deposits/savings.

Deposits/savings of guarantor

Property, business assets, vehicles, farm land and any other security provided they

are valued at the current market rates by professional valuers and upon

presentation of authentic valuation certificates.

Group recommendation and guarantee

n) Log Books Pledged by Third Parties, the society will expect the following

Endorsement letters

Identification Card (ID) of the owners

Certificate of registrations in the case of a registered legal entity

Pin Cards for both the endorser and the applicant

ID cards for both the endorser and the applicant.

The valuation of the car and legal fees shall be paid by the loan applicant.

Up to 50% of the surrender value in the case of life insurance cover may be accepted for

loan guarantee.

o) The society will only accept valuation reports from the Automobile Association of Kenya or


Loaning Policy

any other firms of repute that may be approved by the Management Committee,

when dealing motor vehicle log books.

p) All security offered must be in place and in possession of the SACCO before funds are

disbursed.

4.9 Collateral Management

a) The Custody of collateral/securities - will be placed on the Treasurer or manager

b) Collateral/securities movement - All collateral documents will be stamped by the SACCO’s

lawyers from the members accompanied by letters of instruction from the SACCO.

c) Once securities are perfected, the security documents will be forwarded to the treasurer for

entering into the securities register.

d) The Treasurer will countersign each entry in the securities register against the Accountant,

signature and the documents will be filled in safe custody.

e) Collateral documents called for usage in other departments like or by the SACCO’s external

professionals i.e. lawyers will be recorded in the movements register and signed for by the

person collecting on behalf.

f) Release of Collateral/securities to the Member - Securities will only be released to the

member when all liabilities in the SACCO’s books have been cleared. It is the duty and

responsibility of the person delegated by the SACCO to ensure that the member’s

outstanding balances are cleared. The dates of release will be recorded in the securities

register and signed for by the member. Documents will be released to the member by way

of notification through a signed released of collateral form signed by both the SACCO and

the member.

g) The Credit committee will monitor the movement of collateral in the SACCO. The Credit

Committee will provide a monthly report on collateral management to the Management

Committee.


Loaning Policy

4.10 Insurance on Guarantees

4.10.1 General

The insurance accepted by the SACCO shall be regulated through this policy in order to protect the SACCO’s

interests to the extent possible. The occurrence of a claim on the debtor’s guarantees, as well as the debt of

a borrower or a surety, could render recovery of the loan difficult, if there is no adequate insurance to cover

these eventualities.

4.10.2 Liabilities

The management committee shall be responsible for evaluating the coverage of the insurance to protect

the insurable guarantees. This evaluation must appear separate from the opinion issued on each loan

application and it must be defined therein whether the guarantee offered requires insurance or not, if the

insurance is adequate and in effect or if it needs coverage greater in amounts and/or risks.

Prior to the disbursements and while the member has obligations pending with the SACCO, the

management must:

i. Monitor and record the insurance policies and take charge of the renewal and custody; for

the purpose of having in our power better control and security of outstanding amounts with

such significant guarantees.

NB; For all the cases, the insurance coverage on the guarantees offered must be at least equal to the risk

of the transaction.

4.10.3 Types of Insurance

a) Insurance on Existing Buildings and Facilities

When the guarantee consists of this type of property, the borrower must protect it by means of a policy

for events of force majeure for the entire amount of the appraisal or at least for the amount of the total

risk, including the amount of the insurance according to the economic activity for which it is being used.

This insurance shall include the risks of fire, flood, and any other.

b) Insurance on Buildings and Facilities to Be Built

During the construction period, this property must be protected by means of a “Construction Policy”,

signed for the maximum amount of the construction, ineffect as long as it lasts. When the

construction is completed, the open policy shall be replaced by an ordinary risk policy.


Loaning Policy

c) Insurance on Machinery and Existing Equipment

These guarantees must be covered by means of a damage policy covering the amount of the appraisal

or at least the total amount of the risk. When boilers, compressors, etc., are included as part of the

equipment, an addendum must be included to cover equipment normally operating under pressure to

protect it against any damage it might suffer.

d) Insurance on Vehicles, Self-Propelled Machinery and Vessels This type of means of

transportation must be covered by means of policies especially designed for them, not only to

protect the vehicle but also “civil

liability” i.e., damages they may cause to third parties in their property or their physical integrity.

4.11 Reports

Reports shall be generated at all points of loan application process. The reports will assist the management

committee keep track of the loaning process and aid in making informed decisions. The credit committee

shall be responsible for production of the following reports by fifteenth date of the following month.

a) Loan application report

b) Appraised loans report

c) Deferred loans report

d) Declined loans report

e) Approved loans report

f) Disbursed loans report

g) Loans repayment schedule

h) Recovery variance report

i) Defaulted loans report

4.12 Default management

4.12.1 Arrears

a) A loan shall be considered to be in arrears when whole or part of an instalment is not paid on the

due date.


Loaning Policy

4.12.2 Delinquent loans

When a loan has an instalment in arrears it’s termed as delinquent and thus at a risk and constitutes

grounds for demanding the total amount owed, taking into consideration, that the risk maintained by the

SACCO is for the total collectable amount, which requires the SACCO to enforce the acceleration of the loan

agreements signed by the borrower, however, it should be taken into account that this may be applied at

any time of the payment.

Defaults/ non performing loans

A loan shall be considered to be in default if instalments are missed and remain unpaid for a period of 90

days. The whole loan shall be deemed to be in default.

5 Loan recovery

a) The management committee shall make effort to collect loans considered to be in default.

b) Where the loan and interest balance is equal or less than the member’s savings, it shall be recovered

from the savings.

c) If the loan outstanding is greater than the member’s savings, the society shall recover the loan from

benefits due to the member through the employer.

d) Where a member defaults and the society is unable to recover the loan from his employer, the loan

shall be recovered from the guarantors.

e) No member shall be allowed to withdraw from the society if in default or has outstanding liability

either as a loanee or guarantor.

The following actions shall be taken on loans in arrears and in default

i. Mail notice shall be sent to members that have an instalment in arrears for 30days requesting the

member to pay within 14days, the letter shall be copied to the guarantor(s) for information and also

to aid in recovery process.

ii. Failure to repay the loan after 30days of issuing notice, a demand letter shall be

issued to the member and the guarantors informing them of society’s intention to

realize the security(ies) pledged for the defaulted loan.

iii. If the balance is not settled 30days after the demand notice has been issued, the

society shall recover the loan plus interest from his savings and guarantors.

iv. If the whole balance is not recovered from a members collateral and guarantors, a


Loaning Policy

notification shall be given to the member that he/ she is being transferred to the

cooperative tribunal or a debt collector for further action on recovery at their

expense.

Days in arrears 30 60 90 120

Action Noticeof arrears

issued to the

loanee copied to

guarantors

Demand letter to

loanee and

guarantors

Recovery from

collateral and

guarantors

Handover to debt

collectors/

Cooperative

tribunal

6 Loss of a member

a) Where a member dies while repaying a loan that is not in default, the loan

balance and interest shall be paid by the insurance company, the management

committee shall therefore lodge the claim.

b) Where a member dies and has a loan that is in arrears, the loan shall be

recovered from member’s collateral and guarantors if inadequate.

7 Loan loss provision and write offs

The management committee shall recommend to the AGM from time to time loan provisioning or

writing off of bad and doubtful debts.

8 Credit committee

The credit committee shall consist of three members appointed from among the management

committee but shall not be executive committee members.

The committee shall have a chairman, secretary and a member. The

credit committee shall;

a) Make loan decisions based on the loaning policy approved by the members.


Loaning Policy

b) Inquire carefully/ diligently into the character and financial condition of each

applicant for a loan, and his/ her guarantors, if any, to ascertain his/ her ability to

repay fully and promptly the obligations incurred.

c) Determine whether the loan is for the purpose applied for as the product

requirement.

4.9.8 Credit committee meetings

a) The credit committee shall meet at least monthly.

b) Decisions are made through a simple majority vote by the members.

c) Minutes of all the credit committee meetings shall be filled as society records.

4.9.9 Delegation

The credit committee may delegate their functions but they remain responsible.


Loaning Policy

Chapter 5 SAVINGS

5.1 Savings mobilization

To mobilize savings, the society shall apply aggressive marketing efforts. Appropriate incentives

shall be applied to promote savings growth.

5.1.1 Savings products

Products Min

monthly

savings

Max No

of

withdra

wals p.a

Account

mainten

ance

balance

Min

Deposit

earning

interest

Interest

rate

computa

tion

Withdraw

al fees

Min period

of savings

(Months)

Account

Maintenance

fees

Holiday

Kids

5.2 Withdrawal of savings

No part withdrawal of savings by members shall be allowed safe for the discretionary savings

schemes introduced by the society from time to time.


Loaning Policy

6.0 ADOPTION

We the undersigned Executive Committee Members hereby adopt this loan policy for and on

behalf of Homepesa Savings and Credit Cooperative Society Limited.

NAME SIGN DATE

Chairman

Vice Chairman

Hon Secretary

Treasurer