Credit Union Act, 1997

Making of loans.

35.—(1) Subject to the following provisions of this Part, a credit union may make a loan to a member for a provident or productive purpose, upon such security (or without security) and terms as the rules of the credit union may provide; but no loan shall be made to a member who is under the age of 18 and neither is nor has been married unless an indemnity is provided by the member's parent or guardian or by a person approved by the board of directors.

(2) A credit union shall not make a loan to a member—

(a) for a period exceeding five years if, were the loan to be made, the total amount outstanding in respect of all loans made by the credit union for periods exceeding five years would then exceed 20 per cent. of the total amount outstanding at that time in respect of all loans made by the credit union; or

(b) for a period exceeding ten years if, were the loan to be made, the total amount outstanding in respect of all loans made by the credit union for periods exceeding ten years would then exceed ten per cent. of the total amount outstanding at that time in respect of all loans made by the credit union; or

(c) in the circumstances specified in subsection (3);

and, for the purposes of this subsection, the period of a loan shall be measured from the date on which the loan or, as the case may be, the first instalment of it is paid.

(3) The circumstances referred to in subsection (2)(c) are those where, were a loan to be made to a member, the amount of the member's outstanding liability (including a contingent liability) to the credit union, whether as borrower, guarantor or otherwise, would exceed whichever is the greater of—

(a) £30,000, and

(b) 1.5 per cent. of the total assets of the credit union.

(4) The total amount outstanding in respect of loans made by a credit union to non-qualifying members shall not exceed ten per cent., or such larger percentage as may be approved by the Registrar, of the total amount outstanding in respect of all loans made by the credit union to its members.

(5) Nothing in subsection (4) shall render unlawful any loan made to a member before the commencement of this section but all loans so made shall be taken into account in the application of the financial (including percentage) limits in the preceding provisions of this section.

(6) The Minister may from time to time by order increase the financial (including percentage) limits applicable under the preceding provisions of this section.

(7) 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 for it.

(8) Subject to its rules, in respect of a loan, a credit union may accept, in addition to other forms of security—

(a) a guarantee by a member, or

(b) a pledge by a member of shares in or deposits with the credit union;

and, where such a guarantee or pledge is accepted, it shall be deemed to be a security for the loan.

(9) Subject to the rules of a credit union—

(a) the credit union may pay a loan to a member in instalments or in one sum; and

(b) 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.

(10) A credit union shall not accept from an officer of the credit union a guarantee for a loan to another member unless that other member is the officer's spouse, child or parent.

(11) If a credit union knowingly contravenes any of the provisions of this section, it shall be guilty of an offence.