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Credit Policy


Version Date: 29 September 2016

 

Article I

DECLARATION OF POLICY

This policy paper provides guidelines governing the various loan products of the Cooperative. The policy is aimed at securing members’ investments in the Cooperative.

 

Article II

ELIGIBILITY CRITERIA

The main objective of the Cooperative is to provide benefits to its members. Hence, the loan products are specifically targeted to member needs. However, in order to safeguard members’ investments in the Cooperative, only members in good standing can avail of the Cooperative’s loan products.

To be a member of good standing, the following must be met:

  1. The borrower has to be a bona-fide regular or associate member of the Cooperative.
  2. The borrower has fully paid the Minimum Share Capital of One Thousand Pesos (P1,000.00) and Membership Fee of P200.00.
  3. The borrower has no past due loan payments.
  4. The borrower has actively contributed to share capital build-up.

 

Article III

LOAN ENTITLEMENT

  1. Regular Members can avail of multiple loan products for as long as they meet the following requirements:

    a. No past due balances.
    b. Their share capital build-up is active for the past three months.
    c. The total monthly amortization of both loans will comply with any take-home-pay policy of member's employer.
    d. Total outstanding balance of all loans does not exceed P100,000.00.
     
  2. All members are entitled to receive patronage refund from interest payments on their loans.
  3. Associate Members can borrow up to 75% of their paid-up share capital contribution unless their employers have signed a Memorandum of Agreement (MOA) with HPPEMC in which case, the loan products will be based on mutually agreed terms and conditions as specified in the MOA.

 

Article IV

LOAN PRODUCTS

 

Section 1. Loan Purpose. The Cooperative’s loan products are designed to meet members’ financial requirements while also safeguarding their investments. Thus, co-makers are required on certain loans as follows:

 

Loan Amount Co-makers Needed
Up to P5,000 0
P5,001 to P25,000 1
P25,001 and up 2

 

Note: There will be no Co-Makers needed if total loans (new + outstanding) is less than or equal to the Share Capital of the Member-Borrower.

 

Section 2. Loan Terms.  The Cooperative’s loan products differ from those offered in the market. They are not available from traditional banking sources, they do not entail expensive credit investigation, and they are processed quickly. Moreover, borrowers earn patronage refunds from their loan interest payments which effectively lowers the Coop’s interest rates further.

 

Loan Type Loan Entitlement Loan Ceiling Diminishing Interest Rate Effective Monthly Rate Service Fee Retention Fund Maximum Payment Term
Petty Cash P5,000 P5,000 N/A 2% P100 None 1 month
Emergency P10,000 P10,000 16% 0.79% P200 None 6 months
Birthday Loan See Birthday Loan Table P20,000 16% As low as 0.74% P200 None See Birthday Loan Table
Educational 5 x equity P50,000 18% 0.83% P200 10% 12 months
Hospitalization 5 x equity P50,000 18% 0.83% P200 10% 12 months
Appliance 5 x equity P50,000 24% 1.12% P200 10% 12 months
Motorcycle 5 x equity P50,000 24% 1.12% P200 10% 12 months
EPP Loan 5 x equity P50,000 18% 0.83% P200 10% 12 months
Wedding 5 x equity P50,000 24% 1.12% P200 10% 12 months
Travel 5 x equity P50,000 24% 1.12% P200 10% 12 months
Multipurpose 5 x equity P100,000 36% 1.74% P200 or 0.5% of Loan whichever is higher 10% 24 months
Housing 5 x equity P100,000 18% 0.83% P200 or 0.5% of Loan whichever is higher 10% 24 months
Car Equity 5 x equity P100,000 18% 0.83% P200 or 0.5% of Loan whichever is higher 10% 24 months
Associate Member Loan 75% Equity 75% Equity 16% 0.79% P200 or 0.5% of Loan whichever is higher 10% 24 months
Share Capital Loan Equity Equty 16% 0.79% P200 or 0.5% of Loan whichever is higher 10% 24 months

 

Birthday Loan Table

HPPEMC Tenure Loan Entitlement Payment Term Co-Makers Needed
6 Months P5,000.00 3 Months 0
9 Months P10,000.00 6 Months 0
12 Months P15,000.00 12 Months 0
24 Months P20,000.00 12 Months 0

 

Notes: A member may avail of multiple loans but subject to the following conditions:

  1. Only one (1) outstanding loan allowed for Petty Cash and Birthday Loan.
  2. The total outstanding balance of all loans should not exceed P100,000.00.

 

Section 3. Tenure Requirement. All members/borrowers need to comply with the following HPPEMC tenure requirement which is dependent on the amount of loan.

 

Loan Amount HPPEMC Tenure Requirement (except for Birthday Loan)
Up to P25,000 3 months
P25,001 to P50,000 6 months
P50,001 to P75,000 9 months
P75,001 to P100,000 12 months

 

Note: Any exception to the above will need HPPEMC Board approval.

 

Section 4. Interest Rates. The Cooperative’s loan products must be patterned after market rates. This is to ensure the economic viability of the Cooperative. However, these loan products cannot be offered in the formal financial markets because they would be too expensive for these financial institutions to handle. But since the law mandates that annual net surplus of the Cooperative be returned to members in the form of dividends and patronage refunds, this effectively lowers the interest rates. This way, members get the benefit both by being the owners as well as the borrowers of the Cooperative.

 

Terms, Rates and Conditions are subject to change without notice in the sole discretion of the Cooperative Board of Directors. All amendments to these Terms, Rates and Conditions will be shared to the members through any of the digital communications channel available – email, website, social or media.

 

Section 5. Retention Fund. As part of the Cooperative’s policy on capital build-up, most of the loans borrowed from the Cooperative require a 10% Retention Fund. This means that the borrower will have to add the equivalent of 10% of the loan into his Share Capital Contribution, payable in equal payments throughout the duration of the loan.

 

Section 6. Information Security. As the Cooperative is a separate entity from the Company, no Company confidential information including, but not limited to, compensation, capacity to pay, etc., will be shared between the Company and the Cooperative, the Cooperative is taking all the risk in giving out loans to its members. As such, to safeguard members’ equity, the Cooperative will require co-makers for its loan products. Co-makers are jointly liable with the Maker (Borrower) of the loan. In case of non-payment of the borrower, the Cooperative may go against the co-maker to collect payment.

 

Section 7. Documentation. In addition to the submission of a Loan Application Form, some of the Cooperative’s loan products require additional documentation. This is to ensure responsible use of the Cooperative’s credit facility.

 

Loan Type Documentation Required
Emergency Proof of calamity, death, other fortuitous events
Educational School’s billing statement or official receipt
Hospitalization Hospital’s billing statement or official receipt
Appliance Quotation or official receipt of appliance
Motorcycle Quotation or official receipt of motorcycle
EPP Loan Quotation or official receipt of HP Product
Wedding Quotation or official receipt of wedding expenses
Travel Quotation or official receipt of travel package
Multipurpose Letter of intent stating purpose of loan
Housing Contract to sell, quotation, or official receipts
Car Equity Quotation or official receipt of car
Associate Member Loan N/A
Share Capital Loan N/A

 

Section 8. Penalties. In addition to interest rate charged on past due balances, the following penalties will be imposed on the borrower for delayed payments:

 

Past Due Penalty
Up to 30 days

The Coop will send a reminder letter to member (cc: co-makers)

Loan ceiling will be reduced to 2 x share capital

31-60 days

The Coop will send a reminder letter to member (cc: co-makers)

Penalty fee of 3% of monthly amortization

Loan ceiling will be reduced to amount of share capital contribution

Co-makers will be informed that past due balances may be charged to them

61-90 days

Penalty fee of 6% of monthly amortization

First demand letter from Coop’s legal counsel (cc: co-makers)

Loan availment will be suspended for 6 months after all loans have been paid

Loan amortizations may be transferred to co-makers

91-120 days

Penalty fee of 9% of monthly amortization

Second demand letter from Coop’s legal counsel (cc: co-makers)

Loan availment will be suspended for 1 year after all loans have been paid

Loan amortizations will be transferred to co-makers

 

When past due balances remain unpaid for more than 90 days, the co-makers shall bear the outstanding liability including the interest and penalty charges therein.

 

When past due balances remain unpaid for more than 120 days, the Cooperative may exercise the option to terminate the borrower’s membership and close the member’s Share Capital Contribution against his/her outstanding balance.

 

Section 9. Pre-termination and Restructuring. Any loan can be pre-terminated or restructured at any time subject to a surcharge of 3% of the outstanding loan balance. 

 

Section 10. Credit Life Insurance. As a protection for the Cooperative as well as the Borrower, co-makers, and dependents, all loans above Twenty Thousand Pesos (20,000.00) will be secured by a credit life policy which will be for the account of the Borrower. The credit life policy shall be from a reputable insurance company to be identified by the Cooperative.

 

Section 11. Procedure. The following procedures will be followed when availing of the Cooperative’s loan products:

  1. Member to secure a Loan Application Form either online or from the Coop Admin.
  2. Member to fill-up the form and submit the accomplished form to the Cooperative.
  3. All loan applications will have to be noted by the member's manager.
  4. The Coop Admin will check for completeness of the loan application form as well as the borrower's compliance to Share Capital Contribution and tenure requirement before endorsing the same to the Credit Committee and/or Board of Directors.
  5. All compliant loan applications can be approved by at least two members of the Board.
  6. All non-compliant loan applications will have to be approved by at least one member of the Credit Committee and a majority of the Board of Directors.
  7. The Coop releases loan procees by issuing a check payable to the borrower.

This procedure can be completed in 1-2 weeks for most of the loans assuming borrower is compliant with the Credit Policy. Longer processing period will be needed for loan applications that are not within the Credit Policy as they will require the review/approval/disapproval of the Board of Directors.

 

Note: Where the Board has rejected your loan application, the Board is not obliged to provide any reason for such rejection or to respond to any request for information related to the decision. You may, however, appeal your case to the Board within 10 working days and provide additional information for Board consideration.

 

Article V

RESIGNATIONS

 

Section 1. Member Resignation. If a member resigns from the Company and/or Cooperative, all loans become due and demandable. The member is given 2 options to settle his/her obligations with the cooperative:

  1. For Associate Members (i.e. for those resigning from Company but staying with the Cooperative)
    1. Full Payment: The member can pay-off the remaining balance of the loan in full within 60 days from date of resignation. The 3% pre-termination fee is waived.
    2. Post-dated Checks: Member can issue post-dated checks to pay-off the loan for a maximum term of 6 months. A 3% restructuring fee will be charged.
    3. Auto Debit: Member can opt to continue the BPI auto debit arrangement for a maximum term of 6 months. A 3% restructuring fee will be charged.
  2. For those terminating HPPEMC Membership
    1. Full Payment: The member can pay-off the remaining balance of the loan in full within 30 days from date of resignation. The 3% pre-termination fee is waived.
    2. Post-dated Checks: Resigning members can issue post-dated checks to pay-off the loan for a maximum term of 3 months. A 3% restructuring fee will be charged.
    3. Auto Debit: Resigning member can opt to continue the BPI auto debit arrangement for a maximum term of 3 months. A 3% restructuring fee will be charged.

If the member fails to execute any of the above options after 60 days from date of resignation, the balance of the loan will automatically be transferred to the co-maker/s as stipulated in the Loan Application Form. The board may opt to apply the member’s capital contribution, dividends, savings deposits, and other receivables to his/her outstanding loans before transferring the remaining obligations to the co-maker/s.

 

Section 2. Co-Maker Resignation. If a co-maker resigns, the principal borrower will have to get a new co-maker within 30 days from date of co-maker resignation. Failure to do so will mean suspension of new loan availments.

 

Note: The Cooperative is mandated by RA 9510 to report members’ credit data and behaviors to the Credit Information Corporation or to any other credit information bureaus. A member who is unable to settle his/her obligations to the cooperative may have a negative credit rating which might affect his/her transactions with banks and other financial institutions.


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