Credit Union Annual Report 2022 - Flipbook - Page 78
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2022
22. Financial risk management (continued)
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;
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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;
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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;
•
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 (2021: $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 (2021: 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 value s 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.
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