Credit/Loan Policy of a co-operative society guidelines. The purpose of a loan policy, procedures of approving loans, guarantor-ship/loan security, etc.

1. CREDIT POLICY
STEPHEN KIRITU MWANGI
CO-OPERATIVE OFFICER

2. 1.0 INTRODUCTION
Developed to serve as a guide to the action or decision
making process in the Credit Section of a SACCO.
Provides procedures and guidelines on how the SACCO
should handle or manage its loans.
Addresses loans processing, approval, disbursement,
administration, monitoring and default.
May be formulated as a separate document or form
part of the Bylaws.
Formulated by the MC/BOD for approval and adoption
by the General Meeting.
THE CREDIT POLICY

3. Developed to supplement lending provisions in the
Act, Rules and By-Laws of the SACCO with a view to:-
∗Ensure SACCO does not get into financial
difficulties by approving loans in excess of funds
available.
∗Facilitate efficient and effective loans processing,
approval and recoveries
∗Ensure fairness in loan granting
∗Minimize loan defaulting
∗Improve Society liquidity position
2.0 PURPOSE OF THE CREDIT POLICY

4. The control objectives of the Credit Policy are to
ensure that:-
Loans are granted to bona fide members only
Loans are properly appraised and approved
Loans are properly guaranteed and secured
Loans disbursement is done as per the approved terms and
conditions
Proper records on loans are maintained
There is effective monitoring and control
Defaulted loans are detected for action.
3.0 CONTROL OBJECTIVES

5.  The Credit Policy is normally administered by
the Credit Committee on behalf of the
MC/BOD.
 The Credit Committee may delegate defined
authority and functions in writing to an
employee or an elected official of the SACCO
to facilitate efficient processing of loans.
4.0 ADMINISTRATION OF CREDIT POLICY

6. Lending requirements
Minimum Period of active membership
Minimum Deposits
Waiting period after clearance of loan
before maturity
Waiting period after boosting of deposits
Procedures for loan applications and
processing
5.0 FEATURES OF THE CREDIT POLICY
The main features of the Credit Policy include:

7. Types of Loans and Products
 Development/Maendeleo(Term) Loan
 Education/School Fees Loan
 Emergency Loan
 Instant/Quick/Express Loan
 Okoa Jahazi Loan
Asset loan ; etc.
FEATURES OF THE CREDIT POLICY
(Cont’d)

8. Loans entitlement/Multiplier
Loan limits
Rates of interest
Repayment period for loans
Methods of loan repayment and conditions
Boosting of deposits outside the check-off/ normal
contributions system
Cash Reserves (15% of Deposits)
FEATURES OF THE CREDIT POLICY
(Cont’d)

9. Savings Products
Minimum Contribution Across the Board
Save As You Earn(SAYE)
Save As You Borrow(SAYB)
Education Savings Scheme(ESS)
Holiday/Withdrawable -Savings Account
Guarantee and Security
 Personal Guarantee - 90% of Deposits
Guarantors – as per the Credit Policy
 Group Guarantee – as per the Credit Policy
 Other Collateral – as per the Credit Policy
FEATURES OF THE CREDIT POLICY (Cont’d)

10. Refinancing of loans
Withdrawal of deposits
Transfer of deposits
Default and withdrawal
SACCO Rejoining conditions
LOAN APPLICATION AND AGREEMENT FORM
FEATURES OF THE CREDIT POLICY (Cont’d)

11. THE
END