Credit Union Act, 1966
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Loans by a credit union. |
11.—(1) A credit union may make a loan, upon such securities (or without security) and terms as the rules may provide, to a member for a provident or productive purpose. | |
(2) Every application to a credit union for a loan shall be in writing and shall state the purpose for which the loan is required and the security (if any) offered therefor. | ||
(3) A credit union may, subject to the rules, accept, in addition to other forms of security, a guarantee, or a pledge of shares or deposits in the credit union, by a member thereof in respect of a loan made by the credit union and such guarantee or pledge shall be deemed to be a security for such loan. | ||
(4) A credit union may, subject to its rules, pay a loan to a member in fixed monthly instalments or in one sum and a member may repay such a loan in whole or in part on any day on which the office of the credit union is open for business. | ||
(5) A loan shall not be made by a credit union to a member— | ||
(a) unless the loan is approved by all the members of the board of directors or of the Credit Committee present at the meeting of the board or committee (as the case may be) at which the application for the loan is considered and the number of such members of the board or committee constitutes a majority thereof, | ||
(b) for a period exceeding five years commencing on the date on which the loan or the first instalment thereof, (as the case may be) is paid, | ||
(c) if on the making thereof that member would stand indebted to the credit union in a sum exceeding ten per cent. of the total assets of the credit union. | ||
(6) (a) A credit union shall not make a loan to a person who is a member of its board of directors, Membership Committee, Supervisory Committee or Credit Committee except with the unanimous approval by secret ballot of a special committee present when the loan is considered, which special committee shall consist of a majority of the board of directors, a majority of the Credit Committee (if any) and at least one member of the Supervisory Committee, but shall not include the applicant for the loan. | ||
(b) A credit union shall not accept from a person who is a member of its board of directors, Membership Committee, Supervisory Committee or Credit Committee a guarantee for a loan by the credit union to another member of the credit union. | ||
(7) A credit union may charge interest on a loan made under this section but such interest shall not at any time exceed one per cent. per month on the amount of the loan outstanding at that time and shall in every case include all the charges made by the credit union in making the loan. | ||
(8) The rate of interest charged by a credit union on unsecured loans granted at a particular time shall be the same for all such loans. | ||
(9) The rate of interest charged by a credit union on secured loans granted at a particular time shall be the same for all such loans. | ||
(10) Whenever a credit union charges or accepts interest on a loan at a rate greater than that permitted under this section, all the interest agreed to be paid by the member on that loan shall be deemed to have been waived by the credit union, and any interest paid in such a case shall be recoverable by the member or his personal representative as a simple contract debt and an action for the recovery thereof shall be deemed to be an action within the meaning of subsection (7) of section 11 of the Statute of Limitations, 1957 . |