LENDING REQUIREMENTS
1. For a member of Fundilima Sacco to qualify for a loan:
a. The society must have been in existence and active for a period of not less than six months from the date of its registration


b. A member must have accumulated at least six months continuous deposits on the minimum monthly contribution as may be determined by the Central Management Committee/AGM from time to time


c. A member who withdraws from the society and rejoins later will be treated as a new member for the purpose of this loans policy. This member will however retain his old member number as per registration.


d. Savings contribution paid in cash or cheque to boost Deposits outside the check-off system in excess of one third of a member’s basic salary shall remain in the society for a period of four months to qualify for any loan


e. Any amount of savings through the check-off system in excess of one-third of a member’s basic salary shall remain in the society for a period of four months to qualify for any loan.


f. The society’s books of accounts have to be up-to-date in accordance with the co-operative societies Act and Rules.


g .A member applying for a loan must also contribute towards the insurance of the loan granted at the rate agreed upon by the board of directors.


h. A member applying for a loan must repay at least three months of the loan before applying for another loan of different type.


i. If a member granted loan fails to service his/her loan, his or her guarantors may not be granted another loan unless the member resumes repayment or the guarantors are attached.


j. Members from institutions that remit cheques outside the check-off system shall not be granted any further loans unless their remittances are received by the society on monthly basis.


K.A member who remits their monthly repayment irregularly shall only be granted loans equivalent to their savings with the society.


2. All loans shall be restricted to members only and shall be approved by the Credit committee, subject to approval by the Central management committee. No member of the loan approving committee shall be present when his/her loan application is being considered.


a. The central management committee should constantly be briefed during their monthly meeting on the performance of loans granted to staff, supervisory and central management committee members.


b. An employee who tampers with his/her monthly contribution and loan repayment is liable to summarily dismissal and prosecution under section 87 of the co-operative societies Act.


3. The rate of repayment on all loans shall be based on market rates to be decided by the central management committee from time to time as dictated by the changes in the base rate. Appropriate financial management tools such as Break –even analysis shall be used by the Central management committee to recommend interest on loans


4. No member should belong to more than one co-operative savings and credit society at the same time.


a. Where a member leaves the common bond by virtue of transfer of retirement, he may continue to be a member of the society which he/she intends to join under the new employer.


b. All new applicants for membership must provide written proof by their previous employer and the central management committees of the previous Sacco society that they do not have outstanding liability with the previous society, clause No.1 (g) above will apply.


5. a. All applicants for loans shall be made on prescribed forms by the society and shall in each case set out the amount applied, for the purpose of the loan, terms of repayment and type of security provided. The loan application form must be fully completed and supported by at least two most recent pay slips, photocopy of national Identity card on both sides and a letter from the employer confirming the applicants’ ability to repay the loan comfortably.


b. It shall be an offence for an applicant or bookkeeping service employees to give false information regarding Deposits, Shares, Loans and Guarantees .Disciplinary action shall be taken as per the by-laws, terms and conditions of service and the Act.


6. Loan applications shall be considered in the order of First In, First Out.


7. The maximum amount of loans granted to a member shall not exceed four times a members deposit but subject to availability of funds. Where total deductions exceed two thirds of a member’s basic salary, the loan shall be reduced accordingly.


8.Fundilima Sacco Shall maintain 10% cash reserve of the members saving in accordance with By-Law(cash reserves).At least part of the cash reserve shall be kept deposit account and will not be available for granting loans.Such reserves shall be updated monthly.


Emergency Loans

9. Emergencies include sudden hospitalization, funeral expenses, court fines and other unforeseen circumstances beyond a member’s control, but shall not include house rent dues or other loans covered under this policy


b. Emergency loans should, as far as possible, be given within a member’s entitlement and shall not exceed Kshs 50,000 and may be approved by the manager and presented to the credit committee for ratification .However, where a member has exhausted his/her entitlement, he/she may be given a loan, but not exceeding Kshs 10,000

School Fees Loans

10. School fees loans may be granted to a member even if he has an outstanding loan of a different type on the following conditions:-

a. The total of all outstanding loans, including school fees, must not exceed the member’s entitlement

b. Only one school fees loan may be granted in one calendar year. School fees cheques shall be sent direct to the school where applicable and necessary.

College Fees Loans

11a. Loans for local and overseas colleges shall be classified as development loans and will be repaid within     a maximum of 24 months. The credit committee should establish the reliability of the loans.
b. College fees whose recovery is 12 months shall be classified as school fees
c. Any member with any outstanding development loan shall not qualify for college fees

Development Loans

12a. To qualify for a (normal) development, a member’s loan account should have no outstanding balance

b. A member who applies for a development loan less than shares and repayment period is up to 20 months shall be paid off schedule

13. A member who is interdicted by his or her employer and does not have an outstanding loan is eligible for a loan but such a loan shall not exceed his/her deposits.

14. As per section (2a), the loan approval is the responsibility of the central management committee of the society

LOANS APPROVAL

15. The manager may approve emergency loan applications based on the limits specified by the credit committee (as per 9b) provided such loans are fully(100%) secured by deposits and are purely for emergency cases. Any loans above the authority or not otherwise secured by cash shall be referred to the credit committee.

16. The central management committee shall approve or reject all the society loans and those above the authority of the manager.

17. The credit committee shall meet at least once a week.

18. The majority of three members of the credit committee shall meet to review loans approved by the general manager as per specified limits and security and consider other loan applications.

19. The credit committee shall approve loans based on the applicant’s character, capacity, ability to pay, capital and collateral security offered month others.

20. When all the conditions for approval have been certified, a loan will be approved by a majority decision of the credit committee

21. Members will be informed immediately a decision has been passed on the fate of their applications and reasons for passing such decisions.

APPEALS

22. Whenever a member feels that his/her application has not been considered fairly, he she shall appeal stating the grounds of his appeal in writing to the central management committee through the manager within fourteen days after the decision date. The central management committee’s decision shall be final.

REPAYMENTS

23. a.The repayment period shall be determined by the central management committee  but in cases shall not exceed 60 months. Repayment terms shall clearly show separately, amounts relating to the principal loan repayment and interest

b. Deductions for loans repayments shall commence not later than the month in which the loan was paid to members.

24. Loans will be repaid from a member’s salary and no member should be allowed to suffer total deductions (including savings, loan repayment and interest) in excess of two thirds of his/.her monthly salary for members who are on check off system or shall be repaid in full by installments based on the loan agreement and contract. Nothing in the foregoing need prevent any member from repaying his/her loan and interest in whole, or in part, prior to its maturity.

25. a. While a member is free to repay the loan from any other sources besides individual salary, under no circumstance should these other sources be taken to account in determining a member’s ability to repay the loan at the time of loan granting.

b. Other sources of income shall be considered for members out of check-off system.

26. No member will be allowed to withdraw part of his/her deposits or offset part of the deposits against an outstanding loan unless he/she ceases to be a member

27.Whre a member changes employers, he/she may transfer his/her deposits to the society of the new employer, and will be deemed to have joined the society of his/her new employer from the time he/she became a member of the society of his/her former employer. In all cases, a member must clear any outstanding loan with the society of old employer first. The society of his/her first employer shall transfer deposits direct to the society of his/former employer by drawing a cheque in the name of the society, if the member so advises.

28. Emergency loans shall be repaid within a period of 12 months while the school fees loans within a calendar year. College fee shall be repaid within a maximum period of 24 months.

29.A member’s deposits pledged as security for another member’s loan shall not be surrendered to offset his/her outstanding loan, unless the former can provide an alternative security for the latter’s loan.

GUARANTEE

30. Unless the loan applied for is equal to or less than member’s deposits, it must be secured by guarantor(s).The total deposits of the borrower and those of the guarantor(S) must be equal to or more than the loan applied for.

31. No member will be allowed to guarantee more than four development loans. All guarantors must be members of the society.

b. Members of the central management committee and the supervisory committee with spouses and family members who are not in the common bond shall not act as guarantors to one another but shall obtain guarantors from members in the common bond.

32. The obligations of the previous guarantors shall cease upon change of guarantors but subject to new guarantors being accepted by the society. The obligation of the guarantors shall also cease when loans guaranteed have been reduced to rr less than the member’s deposits.

b. The society shall maintain a record of all guarantors to every loan in each member’s personal file.

OTHER SECURITY

33. Pledges in form of articles like land title deeds or insurance policy from reputable firms up to surrender value may be accepted. The society must deposit such articles in a bank for safe custody but must be handed back to the members immediately the loan balance equals the deposits. Confirmation as regards the validity of the articles so pledged from the issuing authority must be obtained before such documents are admitted as security for the loan. Mortgage in real estate can be taken as security for a loan not exceeding two thirds of the mortgage value.

b. The valuation of the property and legal fees shall be paid by the member and the valuer should be a person registered under the law.

DEFAULTERS AND WITHDRAWALS

34.Where a member wishes to withdraw from a society’s membership, he/she shall be required to give the society a written notice of at least 60 days of his/her intention to withdraw

35 .No member shall be allowed to withdraw from the society unless the member’s loan is repaid in full or the loan balance can be fully offset by the member’s deposits. Such a member will also have to satisfy the society that all the loans guaranteed have been paid in full or the balance does not exceed the deposits of the members whose loans were guaranteed

36. A member who retires from the common bond but  retains his/her membership in the co-operative society, shall be granted loan only up to the limit of his/her deposits subject  to 33(a)

b. Any member granted a loan and writes a letter to withdraw from he society before repaying the loan for six months shall be charged expected interest for the whole loan repayment period
.
37.A member who withdraws due to retirement or resignation will be required to clear all
outstanding loans and provide alternative guarantors in cases of loans guaranteed before retirement or resignation. Where a member who is retiring or resigning is not able to clear immediately, he/she will be required to make arrangements with the society for repayments. The society will be required to ensure that the loan is granted beyond the retirement/resignation date of a member if that date is known unless prior arrangements have been made with the central management committee.

38. Where a member is employed on contract, he/she should be granted a loan payable within his/her contractual period .Loans to non-Kenyans will normally not be considered. However in case of emergency, loans may be granted provided that they are guaranteed by Kenyan members. For employees of the society who are employed on contract, the repayment period will be subject to recommendations of the manager depending on the terms of the contract and the merits of the employee.

39. In case a loan is not repaid for a month, the society shall inform the loaned immediately in writing with a copy to each guarantor. If no repayment is effected within the second month, the guarantors shall be informed of this fact and be notified that they will be called upon to honour their obligations if no repayments are effected at the end of the third consecutive month

LOANS DELIQUENCY
40. The manager shall at the end of each month prepare a listing of all loans whose repayment date has been exceeded in the following order 0-2 months,2-6 months,6-12 months,12-18 months and 18 months and over. This list shall be presented to all credit committee meetings detailing action taken to minimize potential loss to the society. All security pledged or guaranteed shall be realized whenever a loan is delinquent for more than three months.
The secretariat staff concerned shall be surcharged fort failure to ensure delinquency is minimized.

LOANS DOCUMENTATION
41.The manager ensure an up to date documentation of loan files is maintained and that the  loan file has the following complete and in place-Loan application, investigative report, loan analysis, loan contract, receipt/acknowledgement of security, security documents and member character card. All application forms for loans either approved or not paid off loans and all reports and minutes of the credit committee for every sitting shall be filed and retained in the society’s files as permanent records. Subject to the proper software the loans granted should be kept in both hard and soft copy.