Credit Union Annual Report 2021 V2 - Flipbook - Page 75
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2021
22. Financial risk management (continued)
Loans to members
All of the Credit Union’s business activity is with its members, who are employees or former employees, or relations
thereof, of the Government of the Cayman Islands and Statutory Authorities/Boards or Utility Companies operating in
the Cayman Islands, which gives rise to a concentration of risk in respect of geographical area, as both members and
assets pledged as security are based exclusively in the Cayman Islands.
All members are eligible for loans provided they meet the conditions specified in the Rules and the Credit Policy.
However, to meet the interest of individual members as well as that of total membership as a whole, the ability to
repay, type of security offered and the availability of funds (management of liquidity risk) assume paramount
significance.
The management of credit risk in respect of loans to members is executed by the management of the Credit Union. All
significant loan applications and credit terms are reviewed and authorised respectively by the Internal Credit Committee
and the Credit Committee. The Credit Union follows lending policies and guidelines approved by the Board of
Directors, as set out in the Credit Policy, which guides the Credit Union’s credit process. The amount of other collateral
obtained is based on the Credit Committee’s credit evaluation of the member.
The Credit Union does not make use of an automated credit scoring or rating system. It is the Credit Union’s policy to
extend borrowing facilities to members that are within the member’s capacity to repay and not to rely exclusively on
security pledged or offered.
The granting of loans to members is based on a number of criteria generally including, inter alia, the following:
•
Loan be made to members only, for provident and productive purposes only;
•
Satisfactory proof of employment or income to support members repayment capacity;
•
Limit of debt service ratio to generally 50% of members income for regular out of share loan products;
•
Completion of the required loan application forms and approval by Manager of Loans, Internal Credit Committee
and Credit Committee;
•
Loans to officers, members of the Board or Committees require approval by the Board of Directors and
Supervisory Committee in conjunction with the Credit Committee;
•
Certain repayment requirements on pre-existing loans prior to approval for additional loans;
•
Loans are not granted to delinquent members, or only to former delinquent members after a period of 6 – 12
months during which time their accounts must have been maintained satisfactorily;
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