Excerpts from the Minutes of the Regular Meeting of the Board of Directors of the Olongapo City Government Employees Multi-Purpose Cooperative (OCGEMPC) Held on 26 May 2011 at the OCGEMOC Training Room, City Hall, Olongapo City
Resolution No. 2011-025
PROMULGATING THE OCGEMPC CONSOLIDATED CREDIT AND COLLECTION POLICIES, RULES, AND REGULATIONS
WHEREAS, uncollected overdue loan payments, many of which are impossible to collect, amount to almost Five Million Pesos as of December 31, 2010;
WHEREAS, the huge amount of uncollectible, overdue loans resulted from past imprudent and reckless lending and collection practices, misinterpretation and outright violations of existing lending and collection policies, and inadequacy of existing credit and collection policies, rules and regulations, among others;
WHEREAS, there is a need to promulgate clear and detailed policies, rules and regulations that would minimize risks and give primacy to the security and preservation of the cooperative’s capital in order to arrest the increase in uncollected loan payments and save the OCGEMPC from bankruptcy;
NOW THEREFORE, upon motion duly made and seconded the Board of Directors of the Olongapo City Government Employees Multi-Purpose Cooperative in meeting assembled, do hereby:
RESOLVE, AS IT IS HEREBY RESOLVED, to, as it hereby promulgates the following:
Title: OCGEMPC CONSOLIDATED CREDIT AND COLLECTION
POLICIES, RULES, AND REGULATIONS
A. GENERAL PROVISIONS
I. STATEMENT OF THE OCGEMPC VISION
The OCGEMPC envisions itself to be the best government employees cooperative in the Philippines, in accordance with the standards set by the Cooperatives Development Authority.
II. STATEMENT OF THE OCGEMPC MISSION
To encourage thrift and continuous capital build-up among its members, and mobilize the capital to enhance their economic, social and spiritual well-being by providing a variety of quality goods and services that are responsive to their needs.
III. GENERAL POLICIES
1. The OCGEMPC shall provide loans to its members for productive and providential purposes.
2. As a matter of strict policy, security and preservation of capital shall take precedence over any other concern of the OCGEMPC, especially in the granting of loans. The cooperative’s capital must never be placed at an undue risk. Loans must never be granted where the probability of collection is uncertain.
3. Policies, rules, regulations and procedures in the granting of loans must encourage members to practice thrift and to increase their shares in the capital of the cooperative.
4. Policies, rules, regulations and procedures in the granting of loans must generally support a system whereby a good credit standing is rewarded, and a bad credit standing is penalized.
5. Individual Directors and all other officers of the OCGEMPC, the Manager and all the management staff are prohibited from altering, or otherwise misinterpreting this policies, rules, regulations and guidelines. Any question of interpretation of any herein provision must be addressed to and resolved by the OCGEMPC Board of Directors.
B. CREDIT POLICIES
I. QUALIFICATIONS OF A LOAN APPLICANT:
A MEMBER WHO FILES AN APPLICATION FOR A LOAN:
1. Must have been a member for at least two months
2. Must have at least 2 months remaining in the term of his/her current employment status to avail of Secured, Rice, and Grocery Loans only, provided that there no other current loans;
3. Must have paid at least 15 shares of his subscription which is equivalent to P1,500;
4. Must have the capacity to pay ; capacity to pay is the amount in excess of P1,500 of the net take home pay per payday, or in excess of P3,000 of the net take home pay per month;
5. Must be current in paying all financial obligations; does not have past due, nor delinquent accounts and continuously contributes to the Shares Capital Build Up and Savings Deposit monthly;
6. Must have a Co-Maker, except when applying for Rice Loan and Grocery Loan, provided that a Secured Loan may not need a co-maker if there are no other current loans.
7. Can avail only of regular, rice and grocery loans if his/her share capital is less than Five Thousand Pesos (P5,000);
8. Can avail of all other loans except Appliance Loan if her/his share capital is Five Thousand Pesos (P5,000) or more;
9. Can avail of an Appliance Loan, if his/her capital share is Five Thousand Pesos (P5,000) or more and has been a member for at least six (6) months.
10. Must attend the required ownership seminar on the date that the loan is released, otherwise all OCGEMPC transactions with him/her shall be suspended.
II. QUALIFICATIONS OF A CO-MAKER
A MEMBER CAN BE A CO-MAKER:
1. If he has been a member for at least two months;
2. If he has paid at least 15 shares subscription equivalent to One Thousand Pesos ( P1,500)
3. If he has the capacity to pay for the maker’s loan;
4. If his current term of employment does not expire earlier than the maturity date of the loan.
5. If he is current in paying all financial obligations; does not have past due, nor delinquent accounts and continuously contributes to the Share Capital Build Up and Savings Deposit monthly;
6. To four (4) members at a time if she/he has capital shares of not less than ten thousand pesos (P10,000), is a permanent employee, and has the capacity to pay the total loans of the four makers;
7. If he/she is willing and able to assume the unpaid balance of the borrower-member in case of default by the maker of the loan;
8. Four (4) times at a time, but only twice for the same borrower-member until loan availed is fully paid, and provided that he/she has the capacity to pay for the loans of all the makers,
9. If he agrees: that upon his separation from employment, she/he shall not be given clearance until another co-maker is found to replace him as co-maker of an outstanding loan or, that his shares capital, savings and other interests in the cooperative be withheld as collateral for loans that he co-makes.
III. EFFECTS OF STATUS OF EMPLOYMENT ON LOAN APPLICATION
1. Contractual or casual employees with less than two (2) months remaining in their current employment status are not qualified to apply for any loan except Secured Loan, Rice Loan and Grocery Loan, provided that there are no other current loans.
2. Contractual and casual employees with more than three (3) months remaining in their current employment status may avail of any loan provided that the term of such loan shall not exceed the remaining months of their current employment status, except for Secured Loan which may be for a maximum of 12 months.
3. Contractual and casual employees with more than 3 months left in their current employment status may be granted loan terms exceeding the remaining months of their current employment status, but not to exceed 12 months, provided that:
- the co-maker of the loan is a permanent employee, or
- the immediate supervisor of the borrower issues a certification to the effect that the appointment of the said borrower shall be renewed, and agrees to be the other co-maker of the loan
4. Permanent employees may be granted loan terms at a maximum of 24 months if the loan amount is Fifty Thousand Pesos (P50,000) or more, subject to all the other applicable loan policies.
IV. BASIC DOCUMENTARY REQUIREMENTS WHEN APPLYING FOR LOAN
Except for Rice Loan and Grocery Loan, the following documents are required when applying for any loan:
1. Duly filled-up application for loan
2. Copy of latest index of payments of borrower and co-maker/s
3. For casual and contractual employees, copy of current appointment or employment contract
V. PROCESSING AND APPROVING AUTHORITY FOR LOANS
1. Loans applications that do not exceed P100,000 shall be approved by the Credit and Collection Committee, after being checked by the Loans Officer and reviewed by the Manager.
2. Loans amounting to more than P100,000 up to P150,000 shall be approved by the Chairperson after being checked by the Loans Officer, reviewed by the Manager and recommended by the Credit Committee, in that order.
3. Loans amounting to more than P150,000, and loans of all officers and staff regardless of amount, shall be approved by the Board after being checked the Loans Officer, reviewed by the Manager, and recommended by the Credit Committee, in that order.
VI. RENEWAL OF LOANS
1. No loan will be renewed until fully paid except for Regular Loan.
2. A regular Loan may be renewed provided that seventy percent (70%) of the loan has already been paid, and provided further that if there was a skipped monthly amortization in the payment of the 70% the corresponding penalties for the skipped payment shall be applied.
C. COLLECTION AND PAYMENT POLICIES
I. General Policies on Collection and Payment
1. The collection of loan amortization, capital build up, savings deposits and all other collectibles shall be done through automatic salary deduction.
2. The automatic salary deduction shall be made in two monthly installments, every 15th and 30th of the month for casual and contractual employees, while the 7th and 22nd of the month for permanent employees or, in one- time monthly payments.
3. For loans released on any day of the month, the collection of the first installment shall be on the first payday of the immediate following month.
4. Over - the- counter payments shall be accepted for additional payments, but not regularly nor habitually in lieu of the regular deductions such as payments of loan amortization, capital build up and savings deposits.
5. Over-the-counter payments of overdue accounts shall also be accepted.
6. As a general rule, post dated checks shall not be accepted as payment or security for loans, except as provided under these policies and guidelines.
7. Failure to fully pay any loan on its maturity date is considered an offense against the OCGEMPC. Overdue accounts must be collected as soon as possible, by all possible means, and offenders penalized accordingly.
II. Fines and Penalties
1. A one-time fine of 4% is imposed on each unpaid monthly loan amortization. Over-the-counter payment of the installment within 16 days after it falls due shall be considered as on-time payment and not subject to fine.
2. For each skipped payment on the monthly amortization of a loan, there shall be a corresponding one (1) month delay in the processing and release of any succeeding loan. Two skipped payments in the same month shall mean a delay of two months in the processing of the succeeding loan.
3. Loans that are not fully paid on their contracted maturity date shall be charged an additional, uncompounded interest, at the rate of three percent (3%) of the total unpaid amount, per month.
4. Loans acquired through acts of dishonesty and deception shall become immediately due and demandable upon discovery. Members committing such acts shall be meted penalties ranging from suspension of credit privileges to termination of membership in the cooperative and legal action, depending on the gravity of the offense, as determined by the Board.
III. Collection of Overdue Accounts
1. All Payments on a loan become immediately due and demandable on its contracted maturity date
a. Immediately after a loan becomes overdue, the maker shall be billed the overdue amount to the full extent of his/her capacity to pay;
b. If the capacity to pay is insufficient for a one-time final payment of the total overdue amount, the remaining balance shall be offset with the borrower’s savings.
c. If the savings are still insufficient, the total remaining overdue amount shall be offset with the borrower’s shares capital within sixty (60) calendar days from the maturity date of the loan.
d. If, after offsetting, the shares capital of the borrower is totally used or reduced to less than Five Hundred Pesos (P500), his membership in the cooperative is deemed suspended, and he shall have a grace period 30 days from the reduction of his shares capital to restore the same to at least P500. Failure of the member to restore his share capital to at least P500 within the 30-day grace period shall be construed as voluntary termination of membership by the member and a waiver of his rights under Article 30 of R.A. 9520. Such member shall be disqualified from re-admission to the cooperative.
e. If the loan is still not fully paid after offsetting with both savings and capital shares of the borrower, the remaining overdue amount including interests shall be billed to the co-maker to the full extent of his capacity to pay until the loan is fully paid.
f. Within 60 days from the contracted maturity date of the loan, the loan maker and/or the co-maker may make over-the-counter partial or full payments for the overdue amount.
g. During the annual distribution of dividends and patronage refunds (ICPR), all past due and delinquent accounts shall be offset with the ICPR of offending members.
h. In case a borrower with overdue accounts is due to leave the government service for any reason, the OCGEMPC shall charge full payment of any outstanding loan from any and all money claims of the borrower from the government, including salaries without regard to capacity to pay, monetization of leave credits, terminal leave, retirement benefits, etc. If such collectibles from the government are insufficient to pay for the whole amount, the borrower may issue a post dated check or checks for the remainder of the past due amount, subject to the approval of the Board.
i. If a member is separated from employment in government without prior notice to the OCGEMPC, his/her overdue account shall be automatically deducted from his/her savings and capital shares, in that order, within one month of the separation from employment. Immediately thereafter, the remaining amount, including interest shall be offset with the co-maker’s savings deposits and billed to the co-maker to the extent of the co-maker’s capacity to pay until the loan is fully paid.
VI. LOANS AVAILABLE TO MEMBERS
The following loans with their corresponding interest rate per month, shall be available to qualified members, subject to the herein policies, rules, regulations and guidelines:
1. REGULAR LOAN – 1%
2. SECURED LOAN – 1%
3. APPLIANCE LOAN – 1%
4. MEDICAL LOAN – 0.5%
5. EDUCATIONAL LOAN – 0.5%
6. HOUSE RENTAL LOAN – 0.5%
7. UTILITY LOAN – 0.5%
8. GROCERY LOAN – 0.5%
9. LIVELIHOOD / BUSINESS LOAN – 1%
10. BURIAL LOAN – 0.5%
11. RICE LOAN – Mark-up ranging from P50 to P100 per sack, depending on market trends, and other relevant factors
D. SPECIFIC POLICIES FOR EACH TYPE OF LOAN:
I. REGULAR LOAN
1. Initial loan shall not be more than P5, 000 for new members; subject to other credit policies.
2. If shares amount to P3, 000 or more, succeeding loans shall be maximum of P10, 000; subject to other credit policies.
3. For casual and contractual employees, maximum of loan amount is P25, 000
4. On their first renewal, permanent employees with capital shares of P10, 000 or more may avail of four times their share capital, subject, to the herein policies.
5. After the first Regular Loan, permanent employees with P20,000 shares capital may avail of Regular Loan up to the limit of their capacity to pay, subject to the herein policies.
6. Terms of Payment:
a. Initial loan, maximum 12 months
c. Succeeding loan, maximum 12 months; except for permanent employees, the maximum term is 18 or 24 months
d. Interest is 1% per month;
7. Other conditions:
C. Subject to 2% Service Fee, and 0.5% Loan Protection Fund
D. Subject to 3% capital build-up (added to the borrower’s shares capital)
8. Requires a co-maker
9. The loan may be renewed after payment of seventy percent (70%) of the outstanding loan, and subject to the other applicable general policies. The unpaid balance of the previous loan shall be deducted from the succeeding loan.
II. RICE LOAN
1. Each member can avail maximum of 1 sack of rice per month, subject to the applicable
general policies
2. Price of rice depends on current market trend, maximum term of 2 months
3. Does not require a co-maker
III. SECURED LOAN
1. Can be availed only if the borrower’s share capital is not less than P5,000
2. Maximum amount of loan is equal to the total capital shares of the member
3. Payable in maximum of 12 months, except for permanent employees
4. Subject to 1% interest per month; one-time 2% service fee, and 0.5% loan protection fund.
5. Does not require a co-maker if applicant does not have any other current loan.
IV. MEDICAL LOAN
Basic Policies:
1. Available for the medical needs of a member or his /her immediate family only.
2. Maximum amount depends on the needs and the capacity to pay of the member.
3. Payable in 12 months (maximum), except for permanent employees
4. Interest is 0.5% per month; service fee is 2% and; loan protection fund is 0.5%
5. Requires a co-maker; for contractual employees, 2 co-makers if the amount is over P40,000
6. Requires billing or statement of account from the medical institution, clinic, laboratory, or attending medical practitioner.
7. Check is payable to the medical institution or medical practitioner.
Supplemental Policies:
1. Check may be payable to the borrower if the loan amount includes payment for medicines, and other related medical expenses not payable to the hospital or clinic, provided however, that the borrower is required as follows:
a. Upon filing of application, attach proof of hospitalization, or medical certificate, doctor’s referral for laboratory tests ,or doctor’s prescription for medicines, or any documentary evidence proving the need for the loan;
b. Within 10 calendar days from release of the loan, to submit receipts or other proofs of payment of the medical expenses paid with the loan.
2. If the borrower fails to submit the above-mentioned proofs of payment or receipts, the loan shall be considered a deceptively and dishonestly acquired loan, and the borrower shall be treated in accordance with the herein Item No. 4 under the heading C.II. “Fines and Penalties”.
V. EDUCATIONAL LOAN
Basic Policies:
1. Available for the education of a member or his immediate family.
2. Maximum amount depends on the school assessment & the capacity to pay of the member
3. Payable in 12 months maximum, except for permanent employees
4. Interest is 0.5% per month; service fee is 2%; loan protection fund is 0.5%
5. Requires a co-maker
6. For approved loan, check is payable to the school
Supplemental Policies:
1. Check may be payable to the borrower if the loan amount includes payments for books, school uniform, and other schooling needs not payable to the educational institution, provided however, that the borrower is required as follows:
a. Upon filing of application, attach proof of schooling such as school assessment, or duly filled-up enrollment form, or prior semester enrollment, school I.D., etc.
b. Within 10 calendar days from release of loan, to submit receipts or proof of payment of the educational expenses paid with the loan.
2. If the borrower fails to submit the above-mentioned proofs of payment or receipts, the loan shall be considered a deceptively and dishonestly acquired loan, and the borrower shall be treated in accordance with the herein Item No. 4 under the heading C.II. “Fines and Penalties”.
VI. HOUSE RENTAL LOAN
1. Available only to members who are paying rent for their place of residence.
2. Amount depends on the needs & the capacity to pay of the member
3. Subject to credit investigation.
3. Maximum term is one (1) year regardless of employment status
3. Interest is 0.5% per month; service fee 2%, and LPF 0.5%
4. Requires a co-maker
5. Requires proof of delinquency in paying the house rental from the lessor
6. For approved loan, check is payable to the lessor
VII. UTILITY LOAN
1. Member needs at least two unpaid billings of Electric, Water and/or Telephone
2. Amount depends on the utility billing and capacity of the member to pay
3. Payable in 12 months maximum, regardless of employment status.
4. Interest is 0.5% per month; service fee 2%, and LPF 0.5%
5. Requires a co-maker
6. For approved loan, the check is payable to the Electric, Water & Telephone Companies
VIII. GROCERY LOAN
1. Maximum loan amount is Php1,000.00
2. Payable in one (1) month (maximum) at 0.5% interest
3. Does not require a co-maker
4. Is in the form of Gift Certificate/Check, in P500 and P1,000 denominations
5. Issuance is every 15th & 30th of the month
6. Accredited establishments are Vercons Supermart and Royal Duty Free
IX. BURIAL LOAN
1. Available only in case of death in the borrower’s immediate family. Immediate family of single members includes only parents and siblings; for married members, legal spouse and children.
2. Maximum loan amount is Thirty Thousand Pesos (P30,000).
3. Payable in 12 months maximum, regardless of employment status.
4. Interest is 0.5% per month; service fee 2%, and LPF 0.5%
5. Requires a co-maker
6. Upon filing of application, attach proof of death, such as death certificate
X. LIVELIHOOD /BUSINESS LOAN
1. Requires a simple Livelihood or Business Feasibility Study.
2. Amount of loan depends on the feasibility study and capacity to pay of the borrower
3. Payable in 12 months, maximum, regardless of employment status
4. Interest is 1% per month; service fee 2%, and LPF 0.5%
5. Requires co-maker/s depending on the amount of loan
6. May require investigation and/ or Board approval
XI. APPLIANCE LOAN
1. Borrower must have been a member for at least 6 months
2. Must have capital shares of not less that P5,000
3. Requires a duly signed appliance price quotation from the appliance store
4. Amount depends on price of appliance and borrower’s capacity to pay
5. Interest is 1% per month; service fee 2%, and LPF 0.5%
6. Requires a co-maker or co-makers depending on amount of loan
7. Loan check is payable to the accredited appliance store.
8. Borrower may get appliance from a non-accredited store provided that it accepts OCGEMPC check
E. REPEALING CLAUSE
1. The following loan windows are hereby closed and will no longer be available to members:
a. Credit Card Repayment Loan
b. Credit Repayment Loan
c. Bonus Loan
2. All previously existing credit and collection policies, rules, regulations and guidelines that are inconsistent with this resolution are hereby repealed..
Done this 26th day of May 2011 at Olongapo City, Philippines.
