Credit Union Annual Report 2021 V2 - Flipbook - Page 76
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)
•
Completion of satisfactory credit checks at all local financial institutions for any amount at Credit Union’s
discretion;
•
Significant loans in excess of $400,000 (2020: $400,000) require the formal approval of the Board of Directors,
in addition to that of the Credit Committee;
•
The period of the loan shall generally not exceed 35 years (2020: 35 years);
•
The extension of credit is generally limited to 80% of the value of the collateral obtained (in the case of land
and structure) or 100% in the case of raw land, in addition to the other conditions of lending as discussed above.
Collateral required for loans
The Credit Union holds collateral against loans to members in a variety of forms, including, but not limited to
mortgage interests over property, lien over motors vehicles, other registered securities over assets, hypothecation of
shares, other savings held in the Credit Union and guarantees. Estimates of fair values are based on values of
collateral assessed (by approved and recognized qualified appraisers) at the time of borrowing and are generally not
updated except when a loan is individually assessed as impaired.
The amount of other collateral obtained is based on the Credit Committee’s credit evaluation of the member.
However, the extension of credit is generally limited to 80% of the value of collateral obtained (with the exception of
raw land which is 100%) in addition to other conditions of lending as described above.
In order to ensure continued safeguard of the value of the collateral offered, buildings and motor vehicles are
required to hold valid comprehensive insurance policies in order to ensure that the collateral is not compromised after
the initial grant of the loan. For all insurances at the time of credit origination, the Credit Union registers its interest in
the property with the insurance provider.
The Credit Union only accepts collateral in the form of assets located in the Cayman Islands.
Notwithstanding the requirement for collateral, the Credit Union does offer loans to members which are unsecured,
which are termed “Xpress or Overdraft Loans.”
These loans are only granted to members subject to the satisfaction of strict lending criteria including assessment of
borrower’s past credit history, ability to repay, confirmation of employment status. The maximum value of the
unsecured element on any one loan is limited to $15,000.
In addition to the “Xpress or Overdraft Loans”, the Credit Union also offers cash advances to members which are also
unsecured. Cash advances are issued for a period of one month. In February 2017, the repayment term for overdraft
loans were extended, by Board approval, to 36 months. These lending products are only offered to members after
careful consideration of the members’ repayment ability and assessment of credit status.
- 41 -