INTRODUCTION

The goal is to balance the financial health of the cooperative with the individual needs of its members.

1. OBJECTIVES OF THE POLICY

   The cooperative wants to ensure fair and transparent access to credit, while safeguarding its financial sustainability. The Interest & Credit Policy achieves this by:

   • Ensuring transparency in credit and interest practices.
   • Promoting responsible lending that benefits members without putting undue risk on the cooperative.
   • Providing a structured process for loan applications, approvals, and repayments.
2. ELIGIBILITY CRITERIA FOR CREDIT

   To prevent financial strain, WAHCOMS sets clear guidelines on who is eligible for loans:

   • Members must be in good standing with the Society (i.e., have no outstanding dues).
   • Each loan applicant must have been a member for at least six months, during which time they must
   • Members applying for loans must submit proof of steady income or demonstrate the ability to repay the loan through their involvement in a business or other income-generating activities.
3. TYPES OF CREDIT FACILITIES

   WAHCOMS offers a range of loan products tailored to meet different needs:

   • Short-term loans: These are small, quick loans meant to cover immediate personal or business expenses.
   • Medium-term loans: These are loans with a repayment period of up to three years, typically for personal projects or business expansion.
   • Long-term loans: Designed for large investments like property or major business expansions, with repayment schedules extending beyond three years.
4. INTEREST RATES

   The cooperative believes in fair and reasonable interest rates, keeping members' financial well-being in mind. The interest rates on various loan products shall be decided by the Board / Advisory Committee and Management Committee from time to time. Here's how interest is applied:

   • Base Interest Rate: All loans carry a base interest rate determined by the prevailing market conditions, but capped to ensure it remains affordable for members.
   • Risk Premium: For certain high-risk loans, such as those for new businesses or long-term investments, a small risk premium may be added. This ensures the cooperative is protected while providing members the funds they need.
   • Interest on Delayed Payments: To encourage timely repayments, an additional penalty interest rate is applied for late payments. However, this is done in a way that doesn't overly burden the member.
5. LOAN APPLICATION PROCESS

   The loan process is structured but flexible:

   • Application Submission: Members submit a loan request form, available at the Society's office or through its online portal.
   • Credit Evaluation: Each application is carefully reviewed by the Management Committee. The committee assesses the member’s creditworthiness, based on their savings history, income, and the proposed use of the loan.
   • Approval Process: Loans are approved based on the member's repayment capacity, collateral (if necessary), and compliance with the cooperative’s policies. Larger loans might require approval from the Board of Directors / Advisory Committee.
   • Disbursement: Once approved, the loan is disbursed to the member's cooperative account.
6. REPAYMENT TERMS

   Repayment is designed to be flexible but responsible:

   • Loans must be repaid according to the schedule agreed upon during disbursement. Members can choose between monthly, quarterly, or biannual repayment options, depending on the loan type and amount.
   • The cooperative encourages automatic deductions from members' savings or salary accounts to ensure timely repayments.
   • Early repayment of loans is encouraged, and in many cases, the cooperative offers discounts on interest for members who clear their loans ahead of schedule.
7. COLLATERAL & SECURITY

   To protect the Society's interests, certain loans require collateral:

   • Small loans may be unsecured but subject to stricter income verification and repayment history checks.
   • Medium and long-term loans often require collateral such as land, vehicles, or business assets. Collateral provides security and reassures the Society of the member's commitment.

   In some cases, personal guarantees from other members can substitute for collateral.

8. LOAN DEFAULT & RECOVERY PROCESS

   While the cooperative aims to support its members, it must also ensure financial discipline:

   • Grace Period: If a member is struggling to meet their repayment schedule, a grace period may be granted, during which penalties are waived.
   • Default Procedures: If a member defaults on a loan, the cooperative will first attempt to negotiate a new payment plan. If this fails, the cooperative may initiate recovery proceedings, which may include selling collateral or initiating legal action.
9. CREDIT MONITORING

   The Society is proactive in monitoring the performance of its loan portfolio:

   • Regular reviews of loan repayments help the cooperative identify any emerging issues with members and take corrective action early.
   • Credit reports for members who have multiple loans or complex credit histories are maintained to manage risks effectively.
10. MEMBER EDUCATION

    The Society believes in empowering members through education:

    • Financial Literacy Programs: Members are offered workshops on budgeting, saving, and responsible borrowing, helping them to make informed financial decisions.
    • Loan Counseling: Before granting large loans, the cooperative provides one-on-one counseling to ensure members understand the terms and are prepared for repayment.
11. AMENDMENTS & POLICY UPDATES

    Recognizing that market conditions and member needs evolve, the Society regularly reviews its credit policy. Changes are made to ensure the policy remains relevant, sustainable, and member-friendly.