BIBLIOGRAPHY NGAYA-AN, DONWIN B. OCTOBER...
BIBLIOGRAPHY
NGAYA-AN, DONWIN B. OCTOBER 2009. Benguet Rural People’s
Multipurpose Cooperative-Branch (BRUPEMCO). Benguet State University, La
Trinidad, Benguet.
Adviser: Evangeline B. Cungihan, Msc.
ABSTRACT
The BRUPEMCO started as a clan organization aimed at helping other members
of the clan who are in need of financial assistance. A proposal by Mr. Belino Diopnisio to
share and open the services of the cooperative so that non-clan members can avail of the
services of BRUPEMCO was approved by the Board of Directors. This lead to the
establishment of the branch cooperative in 2004.
This study was therefore conducted to compare the performance of the branch to
that of the main in terms of asset and membership growth and cooperative performance.
To document the credit policies of the branch that differs from the main cooperative, to
determine the benefits derived by the members and finally to find out it can sustain its
operation without depending on the main cooperative for support.
This study was conducted at the BRUPEMCO-branch office at M&G building 3rd
floor, KM 5, Pico, La Trinidad, Benguet last January 2009. The first hand information
were gathered from the branch manager, the treasurer of the main cooperative and a
survey questionnaire from 50 respondents while the secondary data were taken from the
annual reports, financial statements, credit policies and studies already conducted.
The findings showed that the branch cooperative had a faster growth in total asset
and membership. Asset increased faster in the branch because members deposited their
money as share capital in the cooperative. The financial performance of the two
cooperatives showed a sign of good operation. Based on the 2007 and 2008 financial
statements of the two cooperatives, the computed financial ratios showed that they both
had an excellent financial performance.
The branch has credit policies that were different from the main cooperative. It
has instant loan and share capital build-up scheme which were both absent in the main
cooperative. The loan processing in the main is more time consuming. As to membership
policies, the branch accepts clan or non clan as members while the main cooperative
accept clan members only. Findings showed that members of the branch cooperative
were always satisfied on the services provided by the cooperative. Besides, majority of
the respondents said they were benefited from the services specially the loans and savings
deposit.
The branch cooperative, based on the computed financial performance, showed a
good sign that it can sustain its operation.
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TABLE OF CONTENTS
Page
Bibliography……………………………………………………………………….
i
Abstract…………………………………………………………………………… x
Table of Contents………………………………………………………………….
iii
INTRODUCTION……………………………………………………………….
1
Rationale of the Study ………………………………………………………
1
Statement of the Problem ………………………………………………...... 3
Objectives of the Study …………………………………………………….. 4
Importance of the Study …………………………………………………… 4
Scope and Limitation ………………………………………………………
5
REVIEW OF LITERATURE……………………………………………………..
6
Profile of the Cooperative…………………………………………………...
6
Services of the BRUPEMCO Branch……………………………………….
7
METHODOLOGY………………………………………………………………… 13
Locale and Time of the Study………………………………………………..
13
Respondents of the Study…………………………………………………....
13
Data Collection ……………………………………………………………...
13
Data Gathered .……………………………………………………………… 13
Data Analysis ……………………………………………………………….. 14
RESULTS AND DISCUSSION …………………………………………………..
15
Profile of the Respondents……….…………………………………………
15
Purpose in Joining the Cooperative and
iii
Level of Fulfillment …………………………………………………………
17
Benefits Derived from the Services Availed ..………………………………
19
Loan Services and Number of Times Availed ………………………………
21
Trainings and Seminars Attended …………………………………………...
23
Extent of Satisfaction on the Services of the
Cooperative ………………………………………………………………….
23
Comparative Growth in Total Asset and Number
of Members Between the Branch and the
Main Cooperative …………………………………………………………...
25
Comparative Financial Ratios ……………………………………………….
28
Policy on Membership of the Two Cooperatives …………………………...
31
Loan Policies of the Two Cooperatives……………………………………...
31
Sustainability of the Branch Cooperative……………………………………
33
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS .………………..
34
Summary……………………………………………………………………..
34
Conclusions…………………………………………………………………..
37
LITERATURE CITED………..…………………………………………………...
38
APPENDIX ………………………………………………………………………..
39
A. Letter to the Manager……………………………………………………..
39
B. Letter to the Respondents…………………………………………………
40
C. Survey Questionnaires……………………………………………………
41
iv
INTRODUCTION
Rationale of the Study
The Benguet Rural People’s Multipurpose Cooperative (BRUPEMCO) started as
a clan organization aimed at helping other members of the clan who are in need of
financial assistance. During their clan reunion, they found out that some members of their
clan were in need of financial assistance and others were already well-off. As a result
they agreed to organize a cooperative were those who have money could invest while
those in need of financial assistance could borrow. The organization applied for
registration with the Cooperative Development Authority and the certificate of
registration was issued on February 02, 1995 (Palista, 2007). The members of the
cooperative were clan members.
After 10 years of continues operation, the main cooperative had a slow growth in
terms of asset, net surplus and membership. The area of operation covers Benguet and
Baguio City where they offered loan and savings deposit service. Palista (2007)
mentioned that a limiting factor in the growth of the cooperative was the scope of
membership. A proposal by Mr. Belino Dionisio to share and open the services of
BRUPEMCO so that other members of the community or those who are not members of
the clan could avail of the services of the cooperative was presented to the Board of
Directors. After a series of meetings, the Board of Directors headed by Nicolas Alilis
finally decided to open a branch that will assist small traders who usually borrow from
private money lenders, charging very high rate of interest. Through a capital-build up
scheme the cooperative could provide assistance to these small traders.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Benguet Rural People’s Multipurpose Cooperative Branch branched out into
another cooperative and accepted non-clan members into the cooperative. It is currently
renting an office located at 3rd Floor M & g Building, Km. 5, Pico, La Trinidad, Benguet
where it is approximately 2.5 kilometers far from the main. Most of the members of the
branch cooperative are operating their businesses at the commercial centers of La
Trinidad and Baguio City (Belino, 2008).
The branch cooperative was to offer the same services as the main cooperative
offers but with a different strategy. To make sure that the opening of the branch does not
affect in any way the operation of the main cooperative, the officers formulated the
following safeguards: 1.) The branch must be operated first on a test run status for a
period of three years to find out if it is feasible and viable. The test run started on January
01, 2004 it ended on December 31, 2006. 2.) The branch will adopt an independent
system so as not to affect the financial operation of the main. This means that the branch
has to develop its own capital, operate from its own income and maintain a separate book
of accounts.
Mr. Belino Dionisio, the former bookkeeper of the main and now the branch
manager and Mrs. Dominga Eslao, collector, initiated the test run without
compensation/salary in the first three months. The asset at the end of the test run brought
an impact to BRUPEMCO where it has yield PhP 2,780,043.40.
The three years of test run that ended on December 31, 2006, resulted to an
increase in membership, share capital, savings deposit, time deposit, loans receivable,
gross income, net surplus and assets.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Result after the Test run
Members-291
Share Capital-P1, 780,643.45
Savings Deposit-P658, 685.44
Time Deposit-P50, 000.00
Loans Receivable-P2, 552,017.00
Gross Income-P709, 228.22
Net Surplus-P290, 284.96
Asset-P2, 780,043.40
The BOD unanimously approved to adopt the branch as the first branch of
BRUPEMCO on January 01, 2007. They also hired a bookkeeper on a temporary basis,
two collectors, and a branch manager as initial members of the management staff for the
branch.
The branch operates independently but it had been submitting its financial
reports to the main office during BOD meetings. It has separate list of members. Most
(80%) of the members are with “associate” status, meaning that they are not members of
the clan. Most of them are small traders doing business within the commercial centers of
La Trinidad and Baguio city.
Statement of the Problem
During the test run of the branch cooperative it was observed by the officers that
its growth was faster than the main cooperative. This study was therefore conducted to
document and analyze the operation of Benguet Rural People’s Multipurpose
Cooperative-Branch. It aimed to find answers to the following questions:
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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1. How is the growth of the branch compared to the main cooperative?
2. What credit policies of BRUPEMCO-BRANCH are different from the main?
3. Are there benefits derived by members of the cooperative?
4. Will the branch cooperative be able to sustain its operation?
Objectives of the Study
The general objective of this study is to document and assess the operation
of BRUPEMCO-BRANCH. Specifically; it aimed to:
1. compare the performance of the branch to that of the main in terms of:
a.) Asset and membership growth.
b.) financial performance
2. compare some credit policies of the branch cooperative to that of the main.
3. determine the benefits derived by the members of the cooperative.
4. find out if it can sustain its operation.
Importance of the Study
This study would provide the necessary information to the members, management
staffs and officers of the cooperative as an input for making plans and decisions to
improve the operation of the cooperative.
This study would also serve as reference to students, faculty members and other
researchers who would be interested on cooperative management and development.
Finally, this research would develop the research capability and build-up the
confidence of the researcher.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Scope and Limitation
This study focused on the operation of the BRUPEMCO-branch however, it made
a comparison on the rate of growth between the main and branch operations.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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REVIEW OF LITERATURE
Profile of the Cooperative
Palista (2007), identified the objectives of BRUPEMCO main cooperative as
follows: 1) identify their common basic need, interest and aspiration in life; 2) pool their
human, intellectual and financial resources for the collective solution to the socio-
economic needs of members; 3) strengthen their bonds of relationships; 4) build up
common capital; 5) grant loans for livelihood activities and other related services to the
members; and 6) support the Government and other organizations in their activities that
would promote sustainable socio-economic development.
BRUPEMCO branch is independent in its operation from the main, thus
independent in the membership list and book of accounts, however, BRUPEMCO branch
still submit financial reports to the main branch, according to Mr. Belino Dionisio, the
branch manager.
It is a reality that for a long time, small traders who want to earn a decent living
through livelihood activities are prone victims of moneyed individuals who charge high
interest rates taking advantage of the small trader’s lack of capital. It is on this ground
that BRUPEMCO initiated a capital build-up/ Instant Loan Program to offer an
alternative way where this people can be liberated from their present business condition.
The capital Build-Up/ Instant Program of BRUPEMCO intends to help members
develop their own capital as they borrow from the cooperative without collateral. Their
accumulated capital will enable them to borrow bigger amounts to improve and expand
their business in order to earn more income and eventually improve their living condition.
Benguet Rural People’s Multipurpose Cooperative-Branch
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Services of the BRUPEMCO Branch
1. Loan services
1.1. Instant Loan- This loan services is patterned on the “Bombay Style” where
payment of loan is done on a daily “hulugan”. This particular loan service has
three stages. Stage 1 and 2 is a training period for members to develop and
practice capital Build-Up as they borrow and pay their loans. This is also a way
for the members to prove their honesty, and capability to handle and manage
small amount entrusted to them.
a.) Stage 1- Members may start to avail themselves of loan amounting to
P1, 000.00 without collateral. If they maintain a good record of payment,
P1,000.00 is added to their succeeding loans until they reach P5, 000.00. Sample
loan schedules are presented below: Period of Loan - 30 days:
Loan
Daily
Total
Share
Service
Filling
Hulog
Capital
Fee
Fee
P1,000.00
P50.00
P1,500.00
P410.00
P60.00
P30.00
2,000.00
100.00
3,000.00
820.00
120.00
60.00
3,000.00
150.00
4,500.00
1,230.00
240.00
120.00
4,000.00
200.00
6,000.00
1,640.00
240.00
120.00
5,000.00
250.00
7,500.00
2,050.00
300.00
150.00
b.) Stage II
Amount of Loan- P 5,000.00 to P 10,000.00
Period of Loan- 2 months
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Loan
Daily
Total
Share
Interest
Service
Filling
Hulog
Capital
On Loans
Fees
Fees
P 5,000.00
P 100.00 P 6,000.00
P 600.00
P 200.00
P 150.00
P 150.00
6,000.00
120.00
7,200.00
720.00
240.00
180.00
60.00
7,000.00
140.00
8,400.00
840.00
280.00
210.00
70.00
8,000.00
160.00
9,600.00
960.00
320.00
240.00
80.00
9,000.00
180.00 10,800.00
1,080.00
360.00
270.00
90.00
10,000.00
200.00 12,000.00
1,200.00
400.00
300.00
100.00
c.) Stage III- Members may avail a maximum loan of an amount equivalent to
their share capital plus fifty percent. The additional 50% must not exceed
P20, 000.00.
Period of loan 6 months
Interest 2%
Service fee 1.5%
Filing fee .5%
Share Capital (Php)
Loan (Php)
10,000.00
15,000.00
14,000.00
20,000.00
17,000.00
25,000.00
20,000.00
30,000.00
24,000.00
35,000.00
28,000.00
40,000.00
34,000.00
50,000.00
40,000.00
60,000.00
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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The requirements for stage III loan include: 1) at least P 10,000.00 Share Capital;
2) must have undergone stage 1& II; 3) must have a good record during stage I & II; 3)
positive Record of the ocular inspection of the area where the business is to be
undertaken; 4) must be a resident of Baguio City or Benguet Province; 5) depends on the
availability of funds.
1.2. Short trip loans. This type of loan is patterned to Bombay style of credit
operation wherein if you acquire loan, it must be paid within 24 hours from the time you
borrowed plus the interest fee. Due to the difficulty of collecting, the management
changed the due to 3 days for efficient collection of loans. Time deposits and share
capital are used as collaterals. Members with unobligated deposits may use it to secure
short trip loans.
A sample loan schedule is presented below: Period of Loan- 1 to 3 days
Loan
Share
Interest
Service
Filing
Total
Capital
(3 days)
P 1,000.00
P 10.00
P 2.00
P 2.00
P 1.00
P 15.00
5,000.00
50.00
10.00
10.00
5.00
75.00
10,000.00
100.00
20.00
20.00
10.00
150.00
20,000.00
200.00
40.00
40.00
20.00
300.00
1.3. Third window loans. This type of loan requires that 1st and 2nd window loans
are availed first before a member can be able to avail of this loan. Savings deposits and
share capital are the collateral of the 1st window while the 2nd window needs the collateral
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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such as; land and house and lot titles. These are the same collaterals required for 3rd
window loan. This is payable in 6 months.
1.4. Coop. - member livelihood partnership project This project intends to assist
members who have space, skill and the capability to manage a certain project but do not
have enough capital and have no collateral.
The member through this project must comply with the capital Build-Up program
of the cooperative using the savings formula recommended by the cooperative so that
after some time he/she will avail of the normal regular or instant Loan of the cooperative.
The terms and conditions of this type of loan includes: 1) member provides space and
labor; 2) the cooperative provides capital and supervision; 3) marketing of product is
both the responsibility of the member and the cooperative; 4) honorarium of bookkeeper
is shouldered by the project; 5) Cooperatives collect the normal charges on loans; 6)
partnership project ends after capital and all charges have been fully paid. The
requirements for availment are: 1) must be a member who fully paid the minimum share
capital of 1,000.00 pesos; 2) member of good standing; 3) member must be able to
provide the labor force needed for the project; 4) must be willing to deposit at least 10%
of his income from the project as his capital Build-Up.
2. Deposit
Regular members may invest in the deposit services of the branch if they want to
avail of the deposit and Loan Service of the branch which are not offered in the main.
1. Share Capital- same as in the main
2. Savings Deposit- same as in the main
Benguet Rural People’s Multipurpose Cooperative-Branch
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3. Time Deposits
a.) Regular time Deposit
Minimum Deposit - P 5,000.00
Maximum Deposit - 100,000.00
Duration
Interest
6 months
5%
9 months
9%
1 year
13%
b.) Long Term Deposits: For educational, Housing etc.
Minimum Deposit- P 5,000.00
Maximum Deposit- P 200,000.00
Duration
Interest
5 yrs. =Deposit x 2 100%
8yrs. = Deposit x3 200%
10yrs. = Deposit x 4 300%
12yrs. = Deposit x 5 400%
c.) Time Deposit- Pension Plan
c.1 Pension is on a monthly basis. Fraction of the Month is not
considered.
c.2 Deposit is withdrawable anytime. Pension starts after 1 year
maturity of the deposits. The interest almost reached to 1.34% per
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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year. Pension can be withdrawn every month but stops when deposits
withdrawn.
Minimum Deposit – P 100,000.00
Maximum Deposit - 300,000.00
Deposit
Monthly Pension
P 100,000.00
P 1,340.00
150,000.00
2,020.00
200,000.00
2,690.00
250,000.00
3,370.00
300,000.00
4,050.00
In the study of Victor (2008), most of the members join the cooperative to avail of
the credit services of BRUPEMCO.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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METHODOLOGY
Locale and Time of the Study
This study was conducted in Benguet Rural People’s Multipurpose Coop-Branch;
M.G. Building, 3rd Floor Km. 5, La Trinidad, Benguet. This study was conducted from
December 2008 to January 2009.
Respondents of the Study
The respondents of the study were the branch manager, the treasurer of the
BRUPEMCO main and 50 members.
Data Collection
The primary data collected were through personal interview with the branch
manager and the treasurer of the main cooperative. The secondary data was gathered
from annual reports, financial statements, credit policies of the cooperative and studies
already conducted.
A survey questionnaire was floated at random to 50 members.
Data Gathered
The data gathered were policies of the branch, financial information from the start
of the operation run up to 2007, reports on the number of members, and credit policies of
the cooperative. Information regarding the benefits derived by the members was also
collected.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Data Analysis
The data gathered were classified, tabulated and analyzed using frequency and
percentage for the benefits derived by the members. Financial analysis was done with the
use of financial ratios to determine the financial performance of the cooperative.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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RESULTS AND DISCUSSION
Profile of The Respondents
Table 1 represents the background information of the respondents in terms of the
educational attainment, occupation and number of years in the cooperative.
Educational attainment. Twenty six (52%) of the respondents were college
graduates, thirteen (26%) were high school graduates, six (12%) have finished vocational
courses and five (10%) graduated from elementary. This implies that most of the
members have attained higher level of formal education.
Occupation. As to occupation of the respondents, twenty four respondents (48%)
were businessmen. Seven respondents (14%) each were farmers and employees. Three or
6% were students and housewives, two (4%) each were teachers and drivers and one each
was a mechanic and a doctor. This shows that a significant number of members were
businessmen. It also shows that the branch cooperative of BRUPEMCO accepts
individuals as members regardless of the source of income or occupation.
Number of years as a member of the cooperative. As to the number of years of
membership in the cooperative, most (60%) of the respondents have been a member for
at least two years. Eleven (22%) respondents have been a member for 3 years and nine
(18%) respondents were members for 4 years. This implies that a significant number of
respondents were new members.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Table 1. Profile of the respondents
PARTICULAR
FREQUENCY
PERCENTAGE
Educational Attainment
Elementary
5
10
High School
13
26
College
26
52
Vocational Course
6
12
TOTAL
50
100
Occupation
Businessmen
24
48
Driver
2
4
Doctor
1
4
Employee
7
14
Farming
7
14
Housewife
3
6
Mechanic
1
2
Student
3
6
Teacher
2
4
TOTAL
50
100
Number of Years as Member
0 – 2
30
60
2.1 - 3
11
22
3.1 - 4
9
18
TOTAL
50
100
Benguet Rural People’s Multipurpose Cooperative-Branch
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Purpose in Joining the Cooperative and
Level of Fulfillment
Purpose. People join the cooperative for different purposes. The respondents
enumerated five purposes in joining the cooperative such as: to avail of the credit service,
to deposit their money in the cooperative, to gain knowledge and skills through
attendance to trainings and seminars sponsored by the cooperative, to visit other places
through field trips conducted by the cooperative, and to contribute their knowledge and
skills to the cooperative. Table 2 shows the distribution of the respondents according to
the purpose of the respondents in joining the cooperative. Ninety four percent joined the
cooperative to avail of the credit services, 92% for the savings deposits, 62% for gaining
knowledge and skills through trainings and seminars, 56% visiting other places through
field trips, and 40% joined the cooperative because they wanted to contribute their
knowledge and skills to the cooperative through the conduct of trainings and seminars.
This finding implies that that most members’ purpose in joining the cooperative was to
avail of its credit and deposit services. Nevertheless, there were respondents who joined
Table 2. Purpose of respondents in joining the cooperative
PARTICULAR
FREQUENCY
PERCENTAGE
( F )
( % )
To have an easy access to credit
47
94
To have an easy access to savings deposit
46
92
To contribute my knowledge and skills
20
40
To gain knowledge and skills
29
58
To visit other places
28
56
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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the cooperative to gain knowledge and contribute their skills through training and
seminars, and to visit other places through field trips.
Level of fulfillment. The respondents were asked to rate the level of fulfillment of
their purpose in joining the cooperative. Using a scale of 1 to 4 with 1 as never and 4 as
always, the respondents rated each purpose and these findings are presented in Table 3.
The purpose of having an easy access to loan has a weighted frequency of 519
which got 3.39 weighted average which is interpreted as always. The second purpose
which is to have easy access to savings deposit had 471 weighted frequency and a 3.29
weighted average, also interpreted as always. . The table also implies that most of the
respondents said that they were often satisfied by contributing their knowledge and skills
through trainings and seminars and partly learning from it. On the other hand, the purpose
Table 3. Level of fulfillment of the purposes of members in joining the cooperative
PURPOSES
LEVEL OF FULFILLMENT
WF
WA
Description
To have an easy access to credit
519
3.39
Always
To have an easy access to savings deposit
471
3.29
Always
To contribute my knowledge and skills
161
2.90
Often
To gain knowledge and skills
217
2.89
Often
To visit other places
75
1.47
Never
SCALE USED: 1 - 1.74 Never
1.75 - 2.49 Sometimes
2.50 - 3.24 Often
3.25 - 4.00 Always
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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of visiting other places through field trips was never fulfilled. It had a weighted
frequency of 75 that got a 1.47 weighted average and interpreted as never.
This finding shows that the purposes of the respondents in joining the cooperative
were generally fulfilled.
Benefits Derived from the Services Availed.
Savings and time deposits. Table 4 shows the benefits derived by the respondents
from the services of the cooperative. Forty (80%) of the respondents said that the
cooperative has higher interest rate than the bank while thirty three (66%) said that there
are no withholding tax deducted from the interest. This finding implies that most of the
members deposit their money because of the economic benefits they derived. It also
shows that the respondents developed trust towards the cooperative because twenty one
(42%) and nineteen (38%) of the respondents confident that their money is safe in the
cooperative and they feel satisfied when they contribute to the funds of the cooperative.
Loan services. Forty five (90%) respondents said that interest rate and other
charges are lower than other lending institutions while forty four (88%) said that they can
easily avail of loans in times of need. Thirty eight (76%) said that the cooperative has less
loan requirements and terms than the bank while one (2%) respondent said he can borrow
higher amount from the cooperative than the bank. This was because he is a new member
and has not yet availed of the loan service. These findings show that a great majority of
the respondents perceived they were benefited from the savings and loan services of the
cooperative through higher interest on savings, lower loan charges and lesser
requirements for credit.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Table 4. Benefits derived by the respondents from the cooperative
PARTICULAR
FREQUENCY
PERCENTAGE
( F )
( %)
Savings and Time Deposit Services
Higher interest rate than the bank
40
80
No withholding tax on interest earned
33
66
Feel satisfied to contribute fund to the coop
19
38
Feel confident that the money is safe
11
42
Loan Service
Loan charges are lower
45
90
Coop not strict on loan requirements & terms
38
76
Easy to get loan in times of need
44
88
Can borrow higher amount from the coop
1
2
Mutual Fund
Family will have money to use for my burial
8
22
Future use for my family
28
78
Mutual benefit fund. This type of service that the branch offers is about helping
other members incase of death of co-members. It is said to be mutual because all
members who pay this service would be benefited when death arises. Thirty six
respondents have paid the Mutual Benefit Fund (MBU). Twenty eight respondents (78%)
said that they would use the MBU for future needs while eight (22%) said that it would
be used for their burial. This implies that members of the cooperative help each other
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
21
through this service. It shows also that the future is very important to them that they
contribute to this fund.
Loan Services and Number of Times Availed
Table 5 presents the different types of loan availed by the members and the
number of times that the respondents availed each type of loan.
Stage 1. There were twenty one (42%) respondents have availed this loan from 1-
5 times between 2007 to 2008. Fourteen respondents (28%) availed 6-10 times while
eleven respondents (22%) availed 11-20 times during this period. This finding shows that
some members had been continuously availing this type of loan while the other may have
shifted to other types of loan.
Stage 2. Twenty nine respondents (58%) have availed this loan for 1-5 times.
Thirteen (26%) said they availed this loan 6-10 times while two respondents (4%) availed
this loan 11-20 times between 2007 to 2008.
Stage 3. Twenty six respondents (52%) availed 1-5 times of this loan while only
seven respondents (14%) said they have availed this loan for 6-10 times. No one of the
respondents availed more than 10 times of this loan.
Short trip loan and third window loan. The short trip loan can be availed by
members with time deposits and share capital because these are used as collaterals for the
loan. The minimum amount is P1,000 and the maximum amount is P20,000. This loan is
payable only in three days. The third window loan requires collaterals such as land or
house and lot titles. This loan is payable in 6 months. The finding shows that only twenty
six respondents (52%) have availed of this types of loan. The number of times they
availed this loans between 2007 to 2008 ranged from 1-5 times.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
22
Coop-member livelihood partnership program. This type of loan can be availed by
members with projects or business ventures but have no money for working capital. The
project can be financed by the cooperative and the supervision is joint. Members can only
avail of loan if they have earlier participated in the capital build-up program. The finding
shows that only 15 or 30% of the respondents availed of this type of loan. They availed
this loan from 1 – 5 times.
These findings signify that most of the respondents availed the services not higher
than 5 times since 2007. This also shows that the most availed loan service of the
cooperative was the instant loan (stages1, 2 and 3); especially stage 1 which was the
character loan that is the basis of the cooperative management for them to avail of the
next stages of loan.
Table 5. Distribution of respondents according to type of loan and the number of times
availed
NUMBER OF TIMES AVAILED
TYPE OF LOAN
1 - 5
6 - 10
11 - 20
F
%
F
%
F
%
Stage 1
21
42
14
28
11
22
Stage 2
29
58
13
26
2
4
Stage 3
26
52
7
14
0
0
Short Trip Loan
26
52
0
0
0
0
Third Window Loan
26
52
0
0
0
0
CMLPP
15
30
0
0
0
0
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
23
Trainings and Seminars Attended.
In Table 6, it shows that 100% of the respondents have attended the pre-
membership seminar while forty (80%) respondents have attended the Share capital
build-up seminar. This finding implies that every member of the branch cooperative have
attended the pre-membership education seminar. As part of the loan requirement, the
cooperative do not allow any member to borrow money from the cooperative without
attending the pr-membership education seminar. It may also show that pre-membership
seminar was a need to the respondents. The finding also shows that 10 respondents or
20% did not yet attend the share-capital build-up seminar. They were new members and
did not yet avail of the loan service that is why they had not attended the share capital
build-up seminar.
Extent of Satisfaction on the Services of the Cooperative
The respondents were asked to rate the level of satisfaction they got from the
different services in terms of the following criteria: waiting time or processing time;
interest rate offered for savings and time deposits; and interest rate charged on loans.
Waiting time. According to the respondents, when they deposit their money in
the cooperative or withdraw from the cooperative they do not have to wait for a long time
Table 6. Training and seminars attended
SEMINAR
FREQUENCY
PERCENTAGE
Pre-membership seminar
50
100
Share-capital build-up seminar
40
80
===============================================================
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
24
unlike in the banks. Aside from the short waiting time they also said that the staff of the
cooperative were very accommodating to them and very friendly. Waiting time for the
processing of savings and withdrawal both received a rating of always satisfactory.
Processing of deposits had a weighted average level of satisfaction of 3.5 while
processing of withdrawal had 3.27 (Table 7). Processing of loan application which
included filing of application, release and repayment of the loan, all received a rating of
always satisfactory. This is because loans are always released immediately upon
submission of loan application.
Interest rate on savings and time deposits. Interest rate on savings and time
deposits were rated as always satisfactory by the respondents. The weighted average level
of satisfaction was 3.34. According to the respondents, interest on deposits in the
cooperative is higher than what the banks are offering. Besides , interest on savings in the
bank is taxed while that in the cooperative is tax exempted.
Interest on loan. Interest on loans was rated as always satisfactory by the
respondents. It was noted that the cooperative does not charge interest on loan for stage 1
loans. However, it charges an interest rate of 4% per month or equivalent to 48% per
annum on the other types of loan. The 4% charged by the cooperative is still very cheap
compared to the 10% charged by private lenders. This is probably the reason why the
respondents rated interest on loan as always satisfactory.
Repayment of loan. Table 7 also shows that repayment of loan was not a problem
because of their daily payment. This shows that collection scheme of the cooperative is
effective, although some members cannot pay daily. Even then, the respondents rated
repayment of loan as always satisfactory.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
25
Table 7. Level of satisfaction on the services of the cooperative
Expectations
LEVEL OF SATISFACTION
1
2
3
4
wf
wa
d
A. In terms of process of a service
1. Savings and deposit
a.1. deposit
1
4
69
88
568 3.5 Always
a.2. withdrawal
2
8
72
48
426 3.27 Always
2. Loan
a.3. Application of loan
2
6
30
128 616 3.7 Always
a.4. Release of loan
1
6
54
108 607 3.59 Always
a.5. Repayment of loan
3
10
72
64
495 3.32 Always
B. In terms of interest rate on
Savings and deposit
4
6
69
64
479 3.34 Always
C. In terms of interest rate on loans 3
4
78
68
517 3.37 Always
SCALE USED: 1-1.74 Never
1.75-2.49 Sometimes
2.50-3.24 Often
3.25-4.00 Always
Comparative Growth in Total Asset and Number
of Members Between the Branch and the
Main Cooperative
Number of members. The initial number of members in the branch cooperative in
2004 was 98 as shown in Table 8. This increased by 130% in 2005, while the main
cooperative experienced a negative growth rate of 25% in the same period as found by
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
26
Palista in 2007. Palista mentioned that the decrease was due to the withdrawal of some
members. There were members who could not pay their loans due to unprofitable farm
business and they opted to offset their share capital with their loans resulting to the
termination of their membership from the cooperative. From 2005 to 2008, both the main
and the branch cooperatives had continues increase in their number of members but the
later experienced a faster growth rate than the former.
The computed average yearly increment in the number of members in the branch
cooperative was 133 while the main cooperative was only 13. From 2004 to 2005 the
main cooperative experienced a negative twenty five growth rate while the branch
cooperative had 130% growth rate. In 2006 the main cooperative experienced a slight
growth of only 8% while the branch had a growth rate of about 23%. For the next two
ensuing years the main cooperative had a very minimal increase in growth rate while the
branch cooperative had an increasing growth rate of 35% in 2007 and 61% in 2008.
The growth in membership in the main cooperative was constrained by its membership
policy. It only accepts clan members into the cooperative while the branch cooperative
Table 8. Comparative growth in membership between the main and the branch
cooperative
YEAR
TOTAL MEMBERS
RATE OF GROWTH (%)
Main
Branch
Main
Branch
2004
166
98
2005
125
225
-25
130
5006
136
291
8
22.6
2007
149
392
9
35
2008
163
631
9
61
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
27
accepts any person with visible means of income to become members, thus a faster
growth rate.
Total asset. Table 9 likewise shows the comparison of the total asset of the
branch cooperative to that of the main cooperative. In 2005, total asset of the branch
cooperative was P974,997.32 from only P460,585.69 in 2004 This increased by 111.7%.
In the same period the total asset of the main cooperative increased by only 33%. In
2006, the branch had a total asset growth of 185% compared to only 14% of the main
cooperative. For 2007 and 2008, both cooperatives experienced a decline in the growth
rate. However, the growth rate was higher for the branch cooperative compared to the
main cooperative.
These finding signifies that the branch cooperative had a faster growth in total
asset than the main because of the fast growth rate of membership where the members
deposited their money in the cooperative as share capital thus total asset also increased.
Table 9. Comparison of the growth rate in total asset of the main and the branch
cooperatives (2004-2008)
TOTAL ASSET
RATE OF GROWTH
YEAR
( in pesos)
( in percent )
Main
Branch
Main
Branch
2004
1,584,159.73
460,585.69
2005
2,110,232.43
974,997.32
33
111.7
2006
2,396,098.19
2,780,043.40
14
185.0
2007
3,010,683.00 3,848,306.84
26
38.0
2008
3,173,767.00
5,432,582.52
6
41.0
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
28
Comparative Financial Ratios
Efficiency ratios. This compares the efficiency of the two cooperatives in
managing their financial assets. The efficiency ratios computed were: asset yield,
operational self sufficiency ratio, return on members’ share capital, loan portfolio
profitability, cost per peso of loan, and administrative efficiency ratio.
Table 10 presented that the branch cooperative had an asset yield of about 10.34%
compared to 6.6% of the main. This shows that the branch cooperative was able to
generate P0.10 for every one peso of asset compared to the main cooperative which is
only P0.06 per peso of asset. The operational self sufficiency ratio of the branch and the
main cooperatives were 169% and 136%, respectively. Both cooperatives surpassed the
standard which is 100%. This shows that the two cooperatives have the ability to sustain
their own operations. The branch cooperative’s rate of return on members’ share capital
was 12.6% which is twice that of the main cooperative. This signifies that the earning
power of the members’ money in the branch cooperative is much higher than the return
that they could get if they put their money in the main cooperative. Furthermore, the
return on the members’ investment in the cooperative was still profitable even if there is a
single digit inflation rate in 2008. The loan portfolio profitability was 23.8% in both
cooperatives. Based on the Performance standard for credit cooperatives in the
Philippines; a loan portfolio ratio of more than 20% is an indication of a good
performance. The computed ratios therefore show that both cooperatives had a profitable
lending operation in 2008. The cost per peso of loan in the branch cooperative was
0.0098 while that of the main cooperative was 0.17. This finding implies that the branch
had a lower cost of acquiring the funds for lending and had met the standard which is
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
29
P0.10. The cost of lending in the branch cooperative is cheaper while the main had a
higher cost in managing the cooperative’s loan portfolio. The branch cooperative had an
administrative efficiency ratio of 1.057% compared to the main which was 15.5%. This
indicates that the branch cooperative incurred a lower administrative cost compared to the
main cooperative. This is very advantageous the members of the branch cooperative
because it means that they would have higher returns.
Stability measures. The stability measure computed was liquidity. The liquidity
ratio indicates the short term stability. The branch cooperative had a liquidity ratio of
72.156% compared to the main of 43.2%. The result shows that the branch cooperative
had a better liquidity than the main cooperative. However both cooperatives surpassed
the standard which is not less than 15%. This shows that the branch has a higher ability to
service the withdrawals of members in time. Members do not have to worry that they
might not be able to withdraw their money when they need it.
Structure of assets. The ratios determined in this section included the loan
receivable to asset ratio, share capital to asset ratio, and deposit to asset ratio.
The loans receivables to total assets ratios for the two cooperatives were 93% for
the main and 90% for the branch. Based on the Performance standard for credit
cooperatives in the Philippines, the ideal ratio is 70-80%. The other 20% should be in the
form of fixed asset and cash reserves. This finding presents that the total assets in both
cooperatives were invested in the loan portfolio which is not healthy practice. Incase of
delinquency problems, reserves would not be enough to meet the needed capital. The
total members’ share capital to total asset ratio of the branch cooperative was 59%
compared to the main cooperative which was 81%. The performance standard ratio for
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
30
Table 10. Comparative financial ratios between the branch and the main cooperative for
calendar year 2008
FINANACIAL RATIO
VALUE
Main
Branch
Asset Structure
Asset yield
6.65%
10.34%
Operational self-sufficiency
136.00%
169.00%
Rate on return on members’
Share capital
6.20%
12.60%
Loan portfolio profitability
23.81%
23.80%
Cost per peso of loan
P0.17
P0.01
Administrative efficiency
15.50%
1.06%
Liquidity
43.20%
72.16%
Loans receivable to asset
93.00%
90.00%
Share capital to asset
81.00%
59.00%
Deposit to asset
9.96%
30.00%
share capital to asset is 35-45%. The other 55% should be sourced out from savings
deposit which is cheaper and a higher percentage should be from the reserves of the
cooperative. The finding shows that the share capital to asset ratio of the branch
cooperative was not very far from the standard ratio. This is further supported by the
deposit to total assets ratio, which the branch cooperative had 31% while the main
cooperative had 9.96% only. These findings imply that the branch cooperative was able
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
31
to attract more savings deposit from members, which they could use to finance their
operations, compared to the main cooperative. However, their ratios were way below the
standard ratio of 55-65%.
Policy on Membership of the Two Cooperatives
The branch cooperative can accept a clan or a non-clan member to join the
cooperative while the main cooperative can only accept those who are members of the
clan. This finding relates to the growth of the membership and total asset wherein the
branch had a faster growth than the main because of this policy. A pre-membership
seminar is a requisite in becoming a member to both of the cooperative.
Loan Policies of the Two Cooperatives
The branch cooperative differs to the main cooperative in terms of:
Loan application and release. At the branch cooperative, a member can apply for
instant loan and immediately receive the amount. This type of loan is absent in the main
cooperative. Members has to file an application and wait for the approval of the credit
committee. This takes time because the members of the credit committee come from
different locations so they have to set a time for meeting to approve loan applications.
This is a limiting factor wherein it is a time consuming.
Collection of loans. The branch cooperative has an effective collection tool
wherein it is a daily collection which was adopted from “Bombay” style of credit. It is
advantageous to the cooperative because its liquidity increased The disadvantage is that
the cooperative has to employ a collector who goes to collect everyday. On the part of the
member-borrowers this is not a problem since they are traders, holding cash everyday so
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
32
they could easily give their payment. The main cooperative follow a monthly installment
basis and full payment scheme basis.
The main cooperative was still on the traditional policy while the branch coop
adopted new policies such as:
Share capital build-up. The branch had this type of policy wherein members can
build their share capital through repayment of their loans. Share capital build-up scheme
was put up by the cooperative to increase the share capital of its members. This also can
allow the members to loan higher amounts if they have bigger share capital. This policy
was not adopted by the main cooperative.
Instant loan. The branch cooperative had this type of loan which is absent in the
main cooperative. This loan services is patterned on the “Bombay Style” where payment
of loan is done on a daily “hulugan”. This particular loan service has three stages. Stage 1
and 2 is a training period for members to develop and practice capital Build-Up as they
borrow and pay their loans. This is also a way for the members to prove their credibility,
and capability to handle and manage small amount entrusted to them.
a.) Stage 1- Members may start to avail of loan amounting to PhP1, 000.00
without collateral. If they maintain a good record, P 1,000.00 is added to their succeeding
loans until they reach P5, 000.00. A Sample loan schedule is presented in Exhibit 1.
b.) Stage II- Members can avail of loan amounting to P5,000.00 to P10,000.00
with their share capital as collateral. A sample loan schedule is presented in Exhibit 2.
c.) Stage III- Members may avail a maximum loan of an amount equivalent to
their share capital plus fifty percent. The additional 50% must not exceed P20, 000.00. A
sample loan schedule is presented in Exhibit 3.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
33
The requirements for stage III loan include: 1) at least P 10,000.00 Share Capital;
2) must have undergone stages 1& II; 3) must have a good record during stage I & II; 3)
positive record of the ocular inspection of the area where the business is to be
undertaken; and 4) must be a resident of Baguio City or Benguet Province.
Sustainability of the Branch Cooperative
The computed financial performance of the branch implies that the branch can
sustain its credit operation. It can yield income from its asset, it can meet its short
obligations and can service its members’ withdrawals. In addition, its operational self-
sufficiency ratio is very high. This means that it can sustain its operation since it has very
high operational self sufficiency ratio. The rate on members’ share capital is enough to
convince and recruit more members. The high liquidity ratio implies that it can service
the withdrawals of the members anytime. Furthermore, the positive and fast growth of the
membership and total asset leads to concluding that the branch cooperative can be able to
sustain its operation
Based on the survey questionnaires, most of the respondents were satisfied by the
services of the cooperative. This implies that the level of patronage of the members is
very high that concludes the quality services the cooperative is offering. This also means
that it can sustain its own operation and sooner will grew into a large cooperative since it
has been servicing its members for the past 4 years since it was established as a branch
cooperative.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
34
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
The BRUPEMCO started as a clan organization aimed at helping other members
of the clan who are in need of financial assistance. After 10 years of continuous
operation, a proposal by Mr. Belino Dionisio to share and open the services of the
cooperative so other non-clan members was presented to the Board of Directors and was
approved. This led to the creation of the branch cooperative. To make sure that the
opening of the branch does not affect in any way the operation of the main office, the
following safeguards were formulated: 1.) The branch must be operated first on a 3 year
test run status to find out its feasibility and viability. This started on January 1, 2004 to
December 31, 2006. 2.) The branch must be an independent system so as not to affect the
operation of the main cooperative.
This study was therefore conducted to evaluate the performance of the branch
cooperative from the standpoint of the members, make some comparisons between the
main cooperative and the branch cooperative in terms of asset and membership growth
and financial performance. The study also documented the credit policies of the branch
that differs from the main cooperative.
This study was conducted at the BRUPEMCO-branch office at M&G building 3rd
floor, KM 5, Pico, La Trinidad, Benguet last January 2009. The first hand information
were gathered from the branch manager, the treasurer of the main cooperative through an
interview. A survey questionnaire was floated to 50 member-respondents while the
secondary data were taken from the annual reports, financial statements, credit policies
and studies already conducted.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
35
The finding showed that majority of the respondents availed of the stage 1 and
stage 2 loan windows. Very few availed of the third window loan and the CMLPP.
Majority of the respondents joined the cooperative to have access to its services
specially the loan and savings and time deposits. In terms of the level of fulfillment of
their purposes majority mentioned that they always have easy access to credit and
savings and time deposits. Their purpose of visiting other places through field trips of the
cooperative was never fulfilled. The respondents also said that they are always satisfied
with the services of the cooperative.
The findings showed that the branch cooperative had a faster growth in total asset
and membership. Asset increased faster in the branch because members deposited their
money as share capital in the cooperative. A limiting factor to the main cooperative’s
growth in membership is its membership policy, which is only clan members can join the
cooperative. The financial performance of the two cooperatives showed a sign of good
operation. Based on the 2007 and 2008 financial statements of the two cooperatives, the
computed financial ratios showed that they both had an excellent financial performance.
However, they had a bit difference in the asset yield and rate of returns on members’
share which the branch had higher merit than the main. In liquidity, the branch was more
liquid than the main. This means that the branch has the ability to service its members’
withdrawals on time. The two cooperatives’ assets were invested in the portfolio which
indicates a negative sign to both of the cooperative. In incase of delinquency; the assets
will not be enough when there are sudden withdrawals. The branch also had more deposit
as one of the source of capital; however they were both below the standard ratio.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
36
The branch has credit policies that are different from the main cooperative. It has
instant loan and share capital build-up scheme which were both absent in the main. The
loan processing in the main is more time consuming. As to membership policies, the
branch accepts clan or non clan members to join the coop while the main accept clan
members only.
The branch cooperative based on the computed financial performance showed a
good sign that it can sustain its operation.
Conclusions
Based on the findings of this study, the following conclusions were formulated:
1. The growth BRUPEMCO-branch in terms of total asset and membership was
faster than the main. The financial performance of the branch cooperative based on the
efficiency measures showed that it has the ability to sustain its operation for the
immediate succeeding years. The high liquidity ratio indicates that it has more than
enough cash to sustain its operations, including the withdrawals on savings deposit.
However, both cooperatives present a not good picture of the asset structure especially in
the ratios on loans receivable and deposit to asset which did not meet the standards.
2. The branch has credit policies which were not adopted by the main.
3. Based on the purpose of the respondents in joining the cooperative, it can be
concluded that majority of the members joined the cooperative because of what it can
provide them. And since majority of the respondents were benefited by the services of the
cooperative, this means that the cooperative is providing excellent services to its
members. Furthermore, it implies that the cooperative services are patronized by majority
of the members.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
37
4. Based on the result of the study, the cooperative can sustain its operation in the
succeeding years.
Recommendations
1. The branch cooperative shall review and revise some of its policies regarding
savings deposit especially long term deposit. It is too risky for the cooperative.
2. Members should continuously patronize the cooperative inorder that the
excellent financial performance would be maintained. On the other hand, the cooperative
should once in a while brings its members who had no exposure to other big and
successful cooperatives as an eye opener. In this way the members would appreciate the
important role of the cooperative as an agent of economic change.
3. The main cooperative shall adopt some of the branch cooperative’s credit
policies. This can help motivate the faster growth of the main cooperative.
4. The branch cooperative can now separate as one cooperative. Its track record
showed that it can stand alone as an independent cooperative.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
38
LITERATURE CITED
DIONISIO, BELINO.2008. Manager, Benguet Rural People’s Multipurpose
Cooperative Branch. La Trinidad Benguet.
PALISTA, M. D. 2007. Benguet Rural People’s Multipurpose Cooperative: A
Documentation. BS Thesis. Benguet State University, La Trinidad, Benguet.
VICTOR, A.K. 2008. Members’ Perceived Benefits From the services. Benguet
Rural Peoples’ Multipurpose Cooperative. BS Thesis. Benguet State University,
La Trinidad, Buenguet. Pp 16.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
39
Appendix A
Communication Letter to the Manager
DEPARTMENT OF AGRICULTURAL ECONOMICS AND AGRIBUSINESS
MANAGEMENT (DAEAM)
Benguet State University
La Trinidad Benguet
January 2008
Dionisio Belino
Branch Manager
Benguet Rural People’s Multipurpose Cooperative Branch
3rd Floor M&G Building Km5 Pico, La Trinidad Benguet
Sir:
Warm greetings!
In connection with my research on Benguet Rural People’s Multipurpose
Cooperative Branch: A case Study 2008-2009 of Benguet State University. I have
the honor to request permission to conduct study and float my questionnaires to
your member-borrowers and prospect members in relation to their benefits
derived from the cooperative.
Thank you very much for your favorable action regarding this request.
Your favorable action will be highly appreciated.
Sincerely Yours,
NGAYA-AN, DONWIN B.
(Researcher)
Noted:
EVANGELINE B. CUNGIHAN
Adviser
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
40
Appendix B
LETTER TO THE RESPONDENTS
DEPARTMENT OF AGRICULTURAL ECONOMICS AND
AGRIBUSINESS MANAGEMENT (DAEAM)
Benguet State University
La Trinidad Benguet
SIR/MADAM,
I, DONWIN B. NGAYA-AN, Fourth year Agri-business major in
Cooperative Management of Benguet State University. I am presently a research
titled “BENGUET RURAL PEOPLE’S MULTIPURPOSE COOPERATIVE
BRANCH: A CASE STUDY” as a partial requirement for the degree.
In this connection, may I request a portion of your most precious time to
answer the attached questionnaire and please give your honest answer. Rest
assured that all information you provide would be treat with utmost
confidentiality.
Thank you very much for sharing me a part of your most precious time. God
Speed!
Sincerely Yours,
DONWIN B. NGAYA-AN
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
41
Appendix C
Survey Questionnaire
I. Respondent profile:
1. Name (optional):______________________
2. Educational attainment:
( ) Elementary ( ) College
( ) High school ( ) Vocational courses
3. Main source of income/occupation:_____________________________
4. Number of years in the cooperative:_____________________________
II. Benefits and Reasons
Legend: 1-Never 3- Often
2-Sometimes 4-Always
* Please put a check on your choices and rate.
1. What are your reasons in joining the cooperative?
Reasons
1
2
3
4
( ) To have an easy access to credit.
( ) To have easy access to savings deposits
( ) To contribute my knowledge and skills
through training and seminars
( ) To gain knowledge and skills through
training and seminars
( ) To visit other places through field trips
( ) Others(pls. specify)
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
42
2. What benefits did you receive from the cooperative?
Services availed
Benefits derived
Savings and time deposit
( ) higher interest rate than the bank
( ) no with holding tax deducted from interest
( ) I feel satisfied when I contribute to the funds of
the cooperative
( ) I feel at peace that my money is safe in the
cooperative
( ) Others(specify)_____________________
Loan services
( ) interest rate and other charges are lower than
other lending institutions
( ) loan requirements and terms are less strict than
the bank
( ) I can easily avail of loan in times of need.
( ) can borrow higher amount from the coop than
from the bank
( ) Others (specify) __________________
Mutual benefit fund
( ) For business capital
( ) For future use
( ) others (specify) ____________________
3. Did you avail of the mutual benefit fund?
( ) Yes
( ) No
4. How many times did you avail of the loan services of the coop?
Loan Services
Number of times availed since
2007
A.) Instant loan:
1.Stage I
______
2.Stage II
______
3.Stage III
______
B.) Short trip loans
______
C.) Third window loans
______
D.) Coop-member Livelihood Partnership ______
Program(CMLPP)
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
43
5. What trainings and seminars attended?
( ) Pre-membership Seminar (PMES)
( ) Share capital build-up
( ) Others (pls. specify)
6. What is your extent of satisfaction in terms of time while waiting the
process of a service?
Services
Always
Often
Sometimes
Never
1.Savings
Deposits:
a. Deposit
b. Withdrawal
2. Loan:
a. Application
of loan
b. Release of
loan
c. Repayment
of loan
7. What is the extent of your satisfaction in terms of interest rate on savings and
Time deposits?
( ) Always
( ) Often
( ) Sometimes
( ) Never
8.) What is the extent of your satisfaction in terms of interest rate on loans?
( ) Always
( ) Often
( ) Sometimes
( ) Never
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
44
Exhibit 1
: Period of Loan - 30 days
Loan
Daily
Total
Share
Service
Filling
Hulog
Capital
Fee
Fee
P1,000.00
P50.00
P1,500.00
P410.00
P60.00
P30.00
2,000.00
100.00
3,000.00
820.00
120.00
60.00
3,000.00
150.00
4,500.00
1,230.00
240.00
120.00
4,000.00
200.00
6,000.00
1,640.00
240.00
120.00
5,000.00
250.00
7,500.00
2,050.00
300.00
150.00
Exhibit 2
Period of Loan- 2 months
Loan
Daily
Total
Share
Interest
Service
Filling
Hulog
Capital
On Loans Fees
Fees
P 5,000.00 P 100.00
P 6,000.00 P 600.00
P 200.00
P 150.00
P 150.00
6,000.00
120.00
7,200.00
720.00
240.00
180.00
60.00
7,000.00
140.00
8,400.00
840.00
280.00
210.00
70.00
8,000.00
160.00
9,600.00
960.00
320.00
240.00
80.00
9,000.00
180.00
10,800.00 1,080.00
360.00
270.00
90.00
10,000.00 200.00
12,000.00 1,200.00
400.00
300.00
100.00
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
45
Exhibit 3
Stage 3
Period of loan 6 months
Interest 2%
Service fee 1.5%
Filing fee .5%
Share Capital (Php)
Loan (Php)
10000
15000
14000
20000
17000
25000
20000
30000
24000
35000
28000
40000
34000
50000
40000
60000
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
NGAYA-AN, DONWIN B. OCTOBER 2009. Benguet Rural People’s
Multipurpose Cooperative-Branch (BRUPEMCO). Benguet State University, La
Trinidad, Benguet.
Adviser: Evangeline B. Cungihan, Msc.
ABSTRACT
The BRUPEMCO started as a clan organization aimed at helping other members
of the clan who are in need of financial assistance. A proposal by Mr. Belino Diopnisio to
share and open the services of the cooperative so that non-clan members can avail of the
services of BRUPEMCO was approved by the Board of Directors. This lead to the
establishment of the branch cooperative in 2004.
This study was therefore conducted to compare the performance of the branch to
that of the main in terms of asset and membership growth and cooperative performance.
To document the credit policies of the branch that differs from the main cooperative, to
determine the benefits derived by the members and finally to find out it can sustain its
operation without depending on the main cooperative for support.
This study was conducted at the BRUPEMCO-branch office at M&G building 3rd
floor, KM 5, Pico, La Trinidad, Benguet last January 2009. The first hand information
were gathered from the branch manager, the treasurer of the main cooperative and a
survey questionnaire from 50 respondents while the secondary data were taken from the
annual reports, financial statements, credit policies and studies already conducted.
The findings showed that the branch cooperative had a faster growth in total asset
and membership. Asset increased faster in the branch because members deposited their
money as share capital in the cooperative. The financial performance of the two
cooperatives showed a sign of good operation. Based on the 2007 and 2008 financial
statements of the two cooperatives, the computed financial ratios showed that they both
had an excellent financial performance.
The branch has credit policies that were different from the main cooperative. It
has instant loan and share capital build-up scheme which were both absent in the main
cooperative. The loan processing in the main is more time consuming. As to membership
policies, the branch accepts clan or non clan as members while the main cooperative
accept clan members only. Findings showed that members of the branch cooperative
were always satisfied on the services provided by the cooperative. Besides, majority of
the respondents said they were benefited from the services specially the loans and savings
deposit.
The branch cooperative, based on the computed financial performance, showed a
good sign that it can sustain its operation.
ii
TABLE OF CONTENTS
Page
Bibliography……………………………………………………………………….
i
Abstract…………………………………………………………………………… x
Table of Contents………………………………………………………………….
iii
INTRODUCTION……………………………………………………………….
1
Rationale of the Study ………………………………………………………
1
Statement of the Problem ………………………………………………...... 3
Objectives of the Study …………………………………………………….. 4
Importance of the Study …………………………………………………… 4
Scope and Limitation ………………………………………………………
5
REVIEW OF LITERATURE……………………………………………………..
6
Profile of the Cooperative…………………………………………………...
6
Services of the BRUPEMCO Branch……………………………………….
7
METHODOLOGY………………………………………………………………… 13
Locale and Time of the Study………………………………………………..
13
Respondents of the Study…………………………………………………....
13
Data Collection ……………………………………………………………...
13
Data Gathered .……………………………………………………………… 13
Data Analysis ……………………………………………………………….. 14
RESULTS AND DISCUSSION …………………………………………………..
15
Profile of the Respondents……….…………………………………………
15
Purpose in Joining the Cooperative and
iii
Level of Fulfillment …………………………………………………………
17
Benefits Derived from the Services Availed ..………………………………
19
Loan Services and Number of Times Availed ………………………………
21
Trainings and Seminars Attended …………………………………………...
23
Extent of Satisfaction on the Services of the
Cooperative ………………………………………………………………….
23
Comparative Growth in Total Asset and Number
of Members Between the Branch and the
Main Cooperative …………………………………………………………...
25
Comparative Financial Ratios ……………………………………………….
28
Policy on Membership of the Two Cooperatives …………………………...
31
Loan Policies of the Two Cooperatives……………………………………...
31
Sustainability of the Branch Cooperative……………………………………
33
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS .………………..
34
Summary……………………………………………………………………..
34
Conclusions…………………………………………………………………..
37
LITERATURE CITED………..…………………………………………………...
38
APPENDIX ………………………………………………………………………..
39
A. Letter to the Manager……………………………………………………..
39
B. Letter to the Respondents…………………………………………………
40
C. Survey Questionnaires……………………………………………………
41
iv
INTRODUCTION
Rationale of the Study
The Benguet Rural People’s Multipurpose Cooperative (BRUPEMCO) started as
a clan organization aimed at helping other members of the clan who are in need of
financial assistance. During their clan reunion, they found out that some members of their
clan were in need of financial assistance and others were already well-off. As a result
they agreed to organize a cooperative were those who have money could invest while
those in need of financial assistance could borrow. The organization applied for
registration with the Cooperative Development Authority and the certificate of
registration was issued on February 02, 1995 (Palista, 2007). The members of the
cooperative were clan members.
After 10 years of continues operation, the main cooperative had a slow growth in
terms of asset, net surplus and membership. The area of operation covers Benguet and
Baguio City where they offered loan and savings deposit service. Palista (2007)
mentioned that a limiting factor in the growth of the cooperative was the scope of
membership. A proposal by Mr. Belino Dionisio to share and open the services of
BRUPEMCO so that other members of the community or those who are not members of
the clan could avail of the services of the cooperative was presented to the Board of
Directors. After a series of meetings, the Board of Directors headed by Nicolas Alilis
finally decided to open a branch that will assist small traders who usually borrow from
private money lenders, charging very high rate of interest. Through a capital-build up
scheme the cooperative could provide assistance to these small traders.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
2
Benguet Rural People’s Multipurpose Cooperative Branch branched out into
another cooperative and accepted non-clan members into the cooperative. It is currently
renting an office located at 3rd Floor M & g Building, Km. 5, Pico, La Trinidad, Benguet
where it is approximately 2.5 kilometers far from the main. Most of the members of the
branch cooperative are operating their businesses at the commercial centers of La
Trinidad and Baguio City (Belino, 2008).
The branch cooperative was to offer the same services as the main cooperative
offers but with a different strategy. To make sure that the opening of the branch does not
affect in any way the operation of the main cooperative, the officers formulated the
following safeguards: 1.) The branch must be operated first on a test run status for a
period of three years to find out if it is feasible and viable. The test run started on January
01, 2004 it ended on December 31, 2006. 2.) The branch will adopt an independent
system so as not to affect the financial operation of the main. This means that the branch
has to develop its own capital, operate from its own income and maintain a separate book
of accounts.
Mr. Belino Dionisio, the former bookkeeper of the main and now the branch
manager and Mrs. Dominga Eslao, collector, initiated the test run without
compensation/salary in the first three months. The asset at the end of the test run brought
an impact to BRUPEMCO where it has yield PhP 2,780,043.40.
The three years of test run that ended on December 31, 2006, resulted to an
increase in membership, share capital, savings deposit, time deposit, loans receivable,
gross income, net surplus and assets.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
3
Result after the Test run
Members-291
Share Capital-P1, 780,643.45
Savings Deposit-P658, 685.44
Time Deposit-P50, 000.00
Loans Receivable-P2, 552,017.00
Gross Income-P709, 228.22
Net Surplus-P290, 284.96
Asset-P2, 780,043.40
The BOD unanimously approved to adopt the branch as the first branch of
BRUPEMCO on January 01, 2007. They also hired a bookkeeper on a temporary basis,
two collectors, and a branch manager as initial members of the management staff for the
branch.
The branch operates independently but it had been submitting its financial
reports to the main office during BOD meetings. It has separate list of members. Most
(80%) of the members are with “associate” status, meaning that they are not members of
the clan. Most of them are small traders doing business within the commercial centers of
La Trinidad and Baguio city.
Statement of the Problem
During the test run of the branch cooperative it was observed by the officers that
its growth was faster than the main cooperative. This study was therefore conducted to
document and analyze the operation of Benguet Rural People’s Multipurpose
Cooperative-Branch. It aimed to find answers to the following questions:
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
4
1. How is the growth of the branch compared to the main cooperative?
2. What credit policies of BRUPEMCO-BRANCH are different from the main?
3. Are there benefits derived by members of the cooperative?
4. Will the branch cooperative be able to sustain its operation?
Objectives of the Study
The general objective of this study is to document and assess the operation
of BRUPEMCO-BRANCH. Specifically; it aimed to:
1. compare the performance of the branch to that of the main in terms of:
a.) Asset and membership growth.
b.) financial performance
2. compare some credit policies of the branch cooperative to that of the main.
3. determine the benefits derived by the members of the cooperative.
4. find out if it can sustain its operation.
Importance of the Study
This study would provide the necessary information to the members, management
staffs and officers of the cooperative as an input for making plans and decisions to
improve the operation of the cooperative.
This study would also serve as reference to students, faculty members and other
researchers who would be interested on cooperative management and development.
Finally, this research would develop the research capability and build-up the
confidence of the researcher.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
5
Scope and Limitation
This study focused on the operation of the BRUPEMCO-branch however, it made
a comparison on the rate of growth between the main and branch operations.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
6
REVIEW OF LITERATURE
Profile of the Cooperative
Palista (2007), identified the objectives of BRUPEMCO main cooperative as
follows: 1) identify their common basic need, interest and aspiration in life; 2) pool their
human, intellectual and financial resources for the collective solution to the socio-
economic needs of members; 3) strengthen their bonds of relationships; 4) build up
common capital; 5) grant loans for livelihood activities and other related services to the
members; and 6) support the Government and other organizations in their activities that
would promote sustainable socio-economic development.
BRUPEMCO branch is independent in its operation from the main, thus
independent in the membership list and book of accounts, however, BRUPEMCO branch
still submit financial reports to the main branch, according to Mr. Belino Dionisio, the
branch manager.
It is a reality that for a long time, small traders who want to earn a decent living
through livelihood activities are prone victims of moneyed individuals who charge high
interest rates taking advantage of the small trader’s lack of capital. It is on this ground
that BRUPEMCO initiated a capital build-up/ Instant Loan Program to offer an
alternative way where this people can be liberated from their present business condition.
The capital Build-Up/ Instant Program of BRUPEMCO intends to help members
develop their own capital as they borrow from the cooperative without collateral. Their
accumulated capital will enable them to borrow bigger amounts to improve and expand
their business in order to earn more income and eventually improve their living condition.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
7
Services of the BRUPEMCO Branch
1. Loan services
1.1. Instant Loan- This loan services is patterned on the “Bombay Style” where
payment of loan is done on a daily “hulugan”. This particular loan service has
three stages. Stage 1 and 2 is a training period for members to develop and
practice capital Build-Up as they borrow and pay their loans. This is also a way
for the members to prove their honesty, and capability to handle and manage
small amount entrusted to them.
a.) Stage 1- Members may start to avail themselves of loan amounting to
P1, 000.00 without collateral. If they maintain a good record of payment,
P1,000.00 is added to their succeeding loans until they reach P5, 000.00. Sample
loan schedules are presented below: Period of Loan - 30 days:
Loan
Daily
Total
Share
Service
Filling
Hulog
Capital
Fee
Fee
P1,000.00
P50.00
P1,500.00
P410.00
P60.00
P30.00
2,000.00
100.00
3,000.00
820.00
120.00
60.00
3,000.00
150.00
4,500.00
1,230.00
240.00
120.00
4,000.00
200.00
6,000.00
1,640.00
240.00
120.00
5,000.00
250.00
7,500.00
2,050.00
300.00
150.00
b.) Stage II
Amount of Loan- P 5,000.00 to P 10,000.00
Period of Loan- 2 months
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
8
Loan
Daily
Total
Share
Interest
Service
Filling
Hulog
Capital
On Loans
Fees
Fees
P 5,000.00
P 100.00 P 6,000.00
P 600.00
P 200.00
P 150.00
P 150.00
6,000.00
120.00
7,200.00
720.00
240.00
180.00
60.00
7,000.00
140.00
8,400.00
840.00
280.00
210.00
70.00
8,000.00
160.00
9,600.00
960.00
320.00
240.00
80.00
9,000.00
180.00 10,800.00
1,080.00
360.00
270.00
90.00
10,000.00
200.00 12,000.00
1,200.00
400.00
300.00
100.00
c.) Stage III- Members may avail a maximum loan of an amount equivalent to
their share capital plus fifty percent. The additional 50% must not exceed
P20, 000.00.
Period of loan 6 months
Interest 2%
Service fee 1.5%
Filing fee .5%
Share Capital (Php)
Loan (Php)
10,000.00
15,000.00
14,000.00
20,000.00
17,000.00
25,000.00
20,000.00
30,000.00
24,000.00
35,000.00
28,000.00
40,000.00
34,000.00
50,000.00
40,000.00
60,000.00
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
9
The requirements for stage III loan include: 1) at least P 10,000.00 Share Capital;
2) must have undergone stage 1& II; 3) must have a good record during stage I & II; 3)
positive Record of the ocular inspection of the area where the business is to be
undertaken; 4) must be a resident of Baguio City or Benguet Province; 5) depends on the
availability of funds.
1.2. Short trip loans. This type of loan is patterned to Bombay style of credit
operation wherein if you acquire loan, it must be paid within 24 hours from the time you
borrowed plus the interest fee. Due to the difficulty of collecting, the management
changed the due to 3 days for efficient collection of loans. Time deposits and share
capital are used as collaterals. Members with unobligated deposits may use it to secure
short trip loans.
A sample loan schedule is presented below: Period of Loan- 1 to 3 days
Loan
Share
Interest
Service
Filing
Total
Capital
(3 days)
P 1,000.00
P 10.00
P 2.00
P 2.00
P 1.00
P 15.00
5,000.00
50.00
10.00
10.00
5.00
75.00
10,000.00
100.00
20.00
20.00
10.00
150.00
20,000.00
200.00
40.00
40.00
20.00
300.00
1.3. Third window loans. This type of loan requires that 1st and 2nd window loans
are availed first before a member can be able to avail of this loan. Savings deposits and
share capital are the collateral of the 1st window while the 2nd window needs the collateral
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
10
such as; land and house and lot titles. These are the same collaterals required for 3rd
window loan. This is payable in 6 months.
1.4. Coop. - member livelihood partnership project This project intends to assist
members who have space, skill and the capability to manage a certain project but do not
have enough capital and have no collateral.
The member through this project must comply with the capital Build-Up program
of the cooperative using the savings formula recommended by the cooperative so that
after some time he/she will avail of the normal regular or instant Loan of the cooperative.
The terms and conditions of this type of loan includes: 1) member provides space and
labor; 2) the cooperative provides capital and supervision; 3) marketing of product is
both the responsibility of the member and the cooperative; 4) honorarium of bookkeeper
is shouldered by the project; 5) Cooperatives collect the normal charges on loans; 6)
partnership project ends after capital and all charges have been fully paid. The
requirements for availment are: 1) must be a member who fully paid the minimum share
capital of 1,000.00 pesos; 2) member of good standing; 3) member must be able to
provide the labor force needed for the project; 4) must be willing to deposit at least 10%
of his income from the project as his capital Build-Up.
2. Deposit
Regular members may invest in the deposit services of the branch if they want to
avail of the deposit and Loan Service of the branch which are not offered in the main.
1. Share Capital- same as in the main
2. Savings Deposit- same as in the main
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
11
3. Time Deposits
a.) Regular time Deposit
Minimum Deposit - P 5,000.00
Maximum Deposit - 100,000.00
Duration
Interest
6 months
5%
9 months
9%
1 year
13%
b.) Long Term Deposits: For educational, Housing etc.
Minimum Deposit- P 5,000.00
Maximum Deposit- P 200,000.00
Duration
Interest
5 yrs. =Deposit x 2 100%
8yrs. = Deposit x3 200%
10yrs. = Deposit x 4 300%
12yrs. = Deposit x 5 400%
c.) Time Deposit- Pension Plan
c.1 Pension is on a monthly basis. Fraction of the Month is not
considered.
c.2 Deposit is withdrawable anytime. Pension starts after 1 year
maturity of the deposits. The interest almost reached to 1.34% per
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
12
year. Pension can be withdrawn every month but stops when deposits
withdrawn.
Minimum Deposit – P 100,000.00
Maximum Deposit - 300,000.00
Deposit
Monthly Pension
P 100,000.00
P 1,340.00
150,000.00
2,020.00
200,000.00
2,690.00
250,000.00
3,370.00
300,000.00
4,050.00
In the study of Victor (2008), most of the members join the cooperative to avail of
the credit services of BRUPEMCO.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
13
METHODOLOGY
Locale and Time of the Study
This study was conducted in Benguet Rural People’s Multipurpose Coop-Branch;
M.G. Building, 3rd Floor Km. 5, La Trinidad, Benguet. This study was conducted from
December 2008 to January 2009.
Respondents of the Study
The respondents of the study were the branch manager, the treasurer of the
BRUPEMCO main and 50 members.
Data Collection
The primary data collected were through personal interview with the branch
manager and the treasurer of the main cooperative. The secondary data was gathered
from annual reports, financial statements, credit policies of the cooperative and studies
already conducted.
A survey questionnaire was floated at random to 50 members.
Data Gathered
The data gathered were policies of the branch, financial information from the start
of the operation run up to 2007, reports on the number of members, and credit policies of
the cooperative. Information regarding the benefits derived by the members was also
collected.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
14
Data Analysis
The data gathered were classified, tabulated and analyzed using frequency and
percentage for the benefits derived by the members. Financial analysis was done with the
use of financial ratios to determine the financial performance of the cooperative.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
15
RESULTS AND DISCUSSION
Profile of The Respondents
Table 1 represents the background information of the respondents in terms of the
educational attainment, occupation and number of years in the cooperative.
Educational attainment. Twenty six (52%) of the respondents were college
graduates, thirteen (26%) were high school graduates, six (12%) have finished vocational
courses and five (10%) graduated from elementary. This implies that most of the
members have attained higher level of formal education.
Occupation. As to occupation of the respondents, twenty four respondents (48%)
were businessmen. Seven respondents (14%) each were farmers and employees. Three or
6% were students and housewives, two (4%) each were teachers and drivers and one each
was a mechanic and a doctor. This shows that a significant number of members were
businessmen. It also shows that the branch cooperative of BRUPEMCO accepts
individuals as members regardless of the source of income or occupation.
Number of years as a member of the cooperative. As to the number of years of
membership in the cooperative, most (60%) of the respondents have been a member for
at least two years. Eleven (22%) respondents have been a member for 3 years and nine
(18%) respondents were members for 4 years. This implies that a significant number of
respondents were new members.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
16
Table 1. Profile of the respondents
PARTICULAR
FREQUENCY
PERCENTAGE
Educational Attainment
Elementary
5
10
High School
13
26
College
26
52
Vocational Course
6
12
TOTAL
50
100
Occupation
Businessmen
24
48
Driver
2
4
Doctor
1
4
Employee
7
14
Farming
7
14
Housewife
3
6
Mechanic
1
2
Student
3
6
Teacher
2
4
TOTAL
50
100
Number of Years as Member
0 – 2
30
60
2.1 - 3
11
22
3.1 - 4
9
18
TOTAL
50
100
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
17
Purpose in Joining the Cooperative and
Level of Fulfillment
Purpose. People join the cooperative for different purposes. The respondents
enumerated five purposes in joining the cooperative such as: to avail of the credit service,
to deposit their money in the cooperative, to gain knowledge and skills through
attendance to trainings and seminars sponsored by the cooperative, to visit other places
through field trips conducted by the cooperative, and to contribute their knowledge and
skills to the cooperative. Table 2 shows the distribution of the respondents according to
the purpose of the respondents in joining the cooperative. Ninety four percent joined the
cooperative to avail of the credit services, 92% for the savings deposits, 62% for gaining
knowledge and skills through trainings and seminars, 56% visiting other places through
field trips, and 40% joined the cooperative because they wanted to contribute their
knowledge and skills to the cooperative through the conduct of trainings and seminars.
This finding implies that that most members’ purpose in joining the cooperative was to
avail of its credit and deposit services. Nevertheless, there were respondents who joined
Table 2. Purpose of respondents in joining the cooperative
PARTICULAR
FREQUENCY
PERCENTAGE
( F )
( % )
To have an easy access to credit
47
94
To have an easy access to savings deposit
46
92
To contribute my knowledge and skills
20
40
To gain knowledge and skills
29
58
To visit other places
28
56
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
18
the cooperative to gain knowledge and contribute their skills through training and
seminars, and to visit other places through field trips.
Level of fulfillment. The respondents were asked to rate the level of fulfillment of
their purpose in joining the cooperative. Using a scale of 1 to 4 with 1 as never and 4 as
always, the respondents rated each purpose and these findings are presented in Table 3.
The purpose of having an easy access to loan has a weighted frequency of 519
which got 3.39 weighted average which is interpreted as always. The second purpose
which is to have easy access to savings deposit had 471 weighted frequency and a 3.29
weighted average, also interpreted as always. . The table also implies that most of the
respondents said that they were often satisfied by contributing their knowledge and skills
through trainings and seminars and partly learning from it. On the other hand, the purpose
Table 3. Level of fulfillment of the purposes of members in joining the cooperative
PURPOSES
LEVEL OF FULFILLMENT
WF
WA
Description
To have an easy access to credit
519
3.39
Always
To have an easy access to savings deposit
471
3.29
Always
To contribute my knowledge and skills
161
2.90
Often
To gain knowledge and skills
217
2.89
Often
To visit other places
75
1.47
Never
SCALE USED: 1 - 1.74 Never
1.75 - 2.49 Sometimes
2.50 - 3.24 Often
3.25 - 4.00 Always
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
19
of visiting other places through field trips was never fulfilled. It had a weighted
frequency of 75 that got a 1.47 weighted average and interpreted as never.
This finding shows that the purposes of the respondents in joining the cooperative
were generally fulfilled.
Benefits Derived from the Services Availed.
Savings and time deposits. Table 4 shows the benefits derived by the respondents
from the services of the cooperative. Forty (80%) of the respondents said that the
cooperative has higher interest rate than the bank while thirty three (66%) said that there
are no withholding tax deducted from the interest. This finding implies that most of the
members deposit their money because of the economic benefits they derived. It also
shows that the respondents developed trust towards the cooperative because twenty one
(42%) and nineteen (38%) of the respondents confident that their money is safe in the
cooperative and they feel satisfied when they contribute to the funds of the cooperative.
Loan services. Forty five (90%) respondents said that interest rate and other
charges are lower than other lending institutions while forty four (88%) said that they can
easily avail of loans in times of need. Thirty eight (76%) said that the cooperative has less
loan requirements and terms than the bank while one (2%) respondent said he can borrow
higher amount from the cooperative than the bank. This was because he is a new member
and has not yet availed of the loan service. These findings show that a great majority of
the respondents perceived they were benefited from the savings and loan services of the
cooperative through higher interest on savings, lower loan charges and lesser
requirements for credit.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
20
Table 4. Benefits derived by the respondents from the cooperative
PARTICULAR
FREQUENCY
PERCENTAGE
( F )
( %)
Savings and Time Deposit Services
Higher interest rate than the bank
40
80
No withholding tax on interest earned
33
66
Feel satisfied to contribute fund to the coop
19
38
Feel confident that the money is safe
11
42
Loan Service
Loan charges are lower
45
90
Coop not strict on loan requirements & terms
38
76
Easy to get loan in times of need
44
88
Can borrow higher amount from the coop
1
2
Mutual Fund
Family will have money to use for my burial
8
22
Future use for my family
28
78
Mutual benefit fund. This type of service that the branch offers is about helping
other members incase of death of co-members. It is said to be mutual because all
members who pay this service would be benefited when death arises. Thirty six
respondents have paid the Mutual Benefit Fund (MBU). Twenty eight respondents (78%)
said that they would use the MBU for future needs while eight (22%) said that it would
be used for their burial. This implies that members of the cooperative help each other
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
21
through this service. It shows also that the future is very important to them that they
contribute to this fund.
Loan Services and Number of Times Availed
Table 5 presents the different types of loan availed by the members and the
number of times that the respondents availed each type of loan.
Stage 1. There were twenty one (42%) respondents have availed this loan from 1-
5 times between 2007 to 2008. Fourteen respondents (28%) availed 6-10 times while
eleven respondents (22%) availed 11-20 times during this period. This finding shows that
some members had been continuously availing this type of loan while the other may have
shifted to other types of loan.
Stage 2. Twenty nine respondents (58%) have availed this loan for 1-5 times.
Thirteen (26%) said they availed this loan 6-10 times while two respondents (4%) availed
this loan 11-20 times between 2007 to 2008.
Stage 3. Twenty six respondents (52%) availed 1-5 times of this loan while only
seven respondents (14%) said they have availed this loan for 6-10 times. No one of the
respondents availed more than 10 times of this loan.
Short trip loan and third window loan. The short trip loan can be availed by
members with time deposits and share capital because these are used as collaterals for the
loan. The minimum amount is P1,000 and the maximum amount is P20,000. This loan is
payable only in three days. The third window loan requires collaterals such as land or
house and lot titles. This loan is payable in 6 months. The finding shows that only twenty
six respondents (52%) have availed of this types of loan. The number of times they
availed this loans between 2007 to 2008 ranged from 1-5 times.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
22
Coop-member livelihood partnership program. This type of loan can be availed by
members with projects or business ventures but have no money for working capital. The
project can be financed by the cooperative and the supervision is joint. Members can only
avail of loan if they have earlier participated in the capital build-up program. The finding
shows that only 15 or 30% of the respondents availed of this type of loan. They availed
this loan from 1 – 5 times.
These findings signify that most of the respondents availed the services not higher
than 5 times since 2007. This also shows that the most availed loan service of the
cooperative was the instant loan (stages1, 2 and 3); especially stage 1 which was the
character loan that is the basis of the cooperative management for them to avail of the
next stages of loan.
Table 5. Distribution of respondents according to type of loan and the number of times
availed
NUMBER OF TIMES AVAILED
TYPE OF LOAN
1 - 5
6 - 10
11 - 20
F
%
F
%
F
%
Stage 1
21
42
14
28
11
22
Stage 2
29
58
13
26
2
4
Stage 3
26
52
7
14
0
0
Short Trip Loan
26
52
0
0
0
0
Third Window Loan
26
52
0
0
0
0
CMLPP
15
30
0
0
0
0
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
23
Trainings and Seminars Attended.
In Table 6, it shows that 100% of the respondents have attended the pre-
membership seminar while forty (80%) respondents have attended the Share capital
build-up seminar. This finding implies that every member of the branch cooperative have
attended the pre-membership education seminar. As part of the loan requirement, the
cooperative do not allow any member to borrow money from the cooperative without
attending the pr-membership education seminar. It may also show that pre-membership
seminar was a need to the respondents. The finding also shows that 10 respondents or
20% did not yet attend the share-capital build-up seminar. They were new members and
did not yet avail of the loan service that is why they had not attended the share capital
build-up seminar.
Extent of Satisfaction on the Services of the Cooperative
The respondents were asked to rate the level of satisfaction they got from the
different services in terms of the following criteria: waiting time or processing time;
interest rate offered for savings and time deposits; and interest rate charged on loans.
Waiting time. According to the respondents, when they deposit their money in
the cooperative or withdraw from the cooperative they do not have to wait for a long time
Table 6. Training and seminars attended
SEMINAR
FREQUENCY
PERCENTAGE
Pre-membership seminar
50
100
Share-capital build-up seminar
40
80
===============================================================
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
24
unlike in the banks. Aside from the short waiting time they also said that the staff of the
cooperative were very accommodating to them and very friendly. Waiting time for the
processing of savings and withdrawal both received a rating of always satisfactory.
Processing of deposits had a weighted average level of satisfaction of 3.5 while
processing of withdrawal had 3.27 (Table 7). Processing of loan application which
included filing of application, release and repayment of the loan, all received a rating of
always satisfactory. This is because loans are always released immediately upon
submission of loan application.
Interest rate on savings and time deposits. Interest rate on savings and time
deposits were rated as always satisfactory by the respondents. The weighted average level
of satisfaction was 3.34. According to the respondents, interest on deposits in the
cooperative is higher than what the banks are offering. Besides , interest on savings in the
bank is taxed while that in the cooperative is tax exempted.
Interest on loan. Interest on loans was rated as always satisfactory by the
respondents. It was noted that the cooperative does not charge interest on loan for stage 1
loans. However, it charges an interest rate of 4% per month or equivalent to 48% per
annum on the other types of loan. The 4% charged by the cooperative is still very cheap
compared to the 10% charged by private lenders. This is probably the reason why the
respondents rated interest on loan as always satisfactory.
Repayment of loan. Table 7 also shows that repayment of loan was not a problem
because of their daily payment. This shows that collection scheme of the cooperative is
effective, although some members cannot pay daily. Even then, the respondents rated
repayment of loan as always satisfactory.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
25
Table 7. Level of satisfaction on the services of the cooperative
Expectations
LEVEL OF SATISFACTION
1
2
3
4
wf
wa
d
A. In terms of process of a service
1. Savings and deposit
a.1. deposit
1
4
69
88
568 3.5 Always
a.2. withdrawal
2
8
72
48
426 3.27 Always
2. Loan
a.3. Application of loan
2
6
30
128 616 3.7 Always
a.4. Release of loan
1
6
54
108 607 3.59 Always
a.5. Repayment of loan
3
10
72
64
495 3.32 Always
B. In terms of interest rate on
Savings and deposit
4
6
69
64
479 3.34 Always
C. In terms of interest rate on loans 3
4
78
68
517 3.37 Always
SCALE USED: 1-1.74 Never
1.75-2.49 Sometimes
2.50-3.24 Often
3.25-4.00 Always
Comparative Growth in Total Asset and Number
of Members Between the Branch and the
Main Cooperative
Number of members. The initial number of members in the branch cooperative in
2004 was 98 as shown in Table 8. This increased by 130% in 2005, while the main
cooperative experienced a negative growth rate of 25% in the same period as found by
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
26
Palista in 2007. Palista mentioned that the decrease was due to the withdrawal of some
members. There were members who could not pay their loans due to unprofitable farm
business and they opted to offset their share capital with their loans resulting to the
termination of their membership from the cooperative. From 2005 to 2008, both the main
and the branch cooperatives had continues increase in their number of members but the
later experienced a faster growth rate than the former.
The computed average yearly increment in the number of members in the branch
cooperative was 133 while the main cooperative was only 13. From 2004 to 2005 the
main cooperative experienced a negative twenty five growth rate while the branch
cooperative had 130% growth rate. In 2006 the main cooperative experienced a slight
growth of only 8% while the branch had a growth rate of about 23%. For the next two
ensuing years the main cooperative had a very minimal increase in growth rate while the
branch cooperative had an increasing growth rate of 35% in 2007 and 61% in 2008.
The growth in membership in the main cooperative was constrained by its membership
policy. It only accepts clan members into the cooperative while the branch cooperative
Table 8. Comparative growth in membership between the main and the branch
cooperative
YEAR
TOTAL MEMBERS
RATE OF GROWTH (%)
Main
Branch
Main
Branch
2004
166
98
2005
125
225
-25
130
5006
136
291
8
22.6
2007
149
392
9
35
2008
163
631
9
61
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
27
accepts any person with visible means of income to become members, thus a faster
growth rate.
Total asset. Table 9 likewise shows the comparison of the total asset of the
branch cooperative to that of the main cooperative. In 2005, total asset of the branch
cooperative was P974,997.32 from only P460,585.69 in 2004 This increased by 111.7%.
In the same period the total asset of the main cooperative increased by only 33%. In
2006, the branch had a total asset growth of 185% compared to only 14% of the main
cooperative. For 2007 and 2008, both cooperatives experienced a decline in the growth
rate. However, the growth rate was higher for the branch cooperative compared to the
main cooperative.
These finding signifies that the branch cooperative had a faster growth in total
asset than the main because of the fast growth rate of membership where the members
deposited their money in the cooperative as share capital thus total asset also increased.
Table 9. Comparison of the growth rate in total asset of the main and the branch
cooperatives (2004-2008)
TOTAL ASSET
RATE OF GROWTH
YEAR
( in pesos)
( in percent )
Main
Branch
Main
Branch
2004
1,584,159.73
460,585.69
2005
2,110,232.43
974,997.32
33
111.7
2006
2,396,098.19
2,780,043.40
14
185.0
2007
3,010,683.00 3,848,306.84
26
38.0
2008
3,173,767.00
5,432,582.52
6
41.0
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
28
Comparative Financial Ratios
Efficiency ratios. This compares the efficiency of the two cooperatives in
managing their financial assets. The efficiency ratios computed were: asset yield,
operational self sufficiency ratio, return on members’ share capital, loan portfolio
profitability, cost per peso of loan, and administrative efficiency ratio.
Table 10 presented that the branch cooperative had an asset yield of about 10.34%
compared to 6.6% of the main. This shows that the branch cooperative was able to
generate P0.10 for every one peso of asset compared to the main cooperative which is
only P0.06 per peso of asset. The operational self sufficiency ratio of the branch and the
main cooperatives were 169% and 136%, respectively. Both cooperatives surpassed the
standard which is 100%. This shows that the two cooperatives have the ability to sustain
their own operations. The branch cooperative’s rate of return on members’ share capital
was 12.6% which is twice that of the main cooperative. This signifies that the earning
power of the members’ money in the branch cooperative is much higher than the return
that they could get if they put their money in the main cooperative. Furthermore, the
return on the members’ investment in the cooperative was still profitable even if there is a
single digit inflation rate in 2008. The loan portfolio profitability was 23.8% in both
cooperatives. Based on the Performance standard for credit cooperatives in the
Philippines; a loan portfolio ratio of more than 20% is an indication of a good
performance. The computed ratios therefore show that both cooperatives had a profitable
lending operation in 2008. The cost per peso of loan in the branch cooperative was
0.0098 while that of the main cooperative was 0.17. This finding implies that the branch
had a lower cost of acquiring the funds for lending and had met the standard which is
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
29
P0.10. The cost of lending in the branch cooperative is cheaper while the main had a
higher cost in managing the cooperative’s loan portfolio. The branch cooperative had an
administrative efficiency ratio of 1.057% compared to the main which was 15.5%. This
indicates that the branch cooperative incurred a lower administrative cost compared to the
main cooperative. This is very advantageous the members of the branch cooperative
because it means that they would have higher returns.
Stability measures. The stability measure computed was liquidity. The liquidity
ratio indicates the short term stability. The branch cooperative had a liquidity ratio of
72.156% compared to the main of 43.2%. The result shows that the branch cooperative
had a better liquidity than the main cooperative. However both cooperatives surpassed
the standard which is not less than 15%. This shows that the branch has a higher ability to
service the withdrawals of members in time. Members do not have to worry that they
might not be able to withdraw their money when they need it.
Structure of assets. The ratios determined in this section included the loan
receivable to asset ratio, share capital to asset ratio, and deposit to asset ratio.
The loans receivables to total assets ratios for the two cooperatives were 93% for
the main and 90% for the branch. Based on the Performance standard for credit
cooperatives in the Philippines, the ideal ratio is 70-80%. The other 20% should be in the
form of fixed asset and cash reserves. This finding presents that the total assets in both
cooperatives were invested in the loan portfolio which is not healthy practice. Incase of
delinquency problems, reserves would not be enough to meet the needed capital. The
total members’ share capital to total asset ratio of the branch cooperative was 59%
compared to the main cooperative which was 81%. The performance standard ratio for
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
30
Table 10. Comparative financial ratios between the branch and the main cooperative for
calendar year 2008
FINANACIAL RATIO
VALUE
Main
Branch
Asset Structure
Asset yield
6.65%
10.34%
Operational self-sufficiency
136.00%
169.00%
Rate on return on members’
Share capital
6.20%
12.60%
Loan portfolio profitability
23.81%
23.80%
Cost per peso of loan
P0.17
P0.01
Administrative efficiency
15.50%
1.06%
Liquidity
43.20%
72.16%
Loans receivable to asset
93.00%
90.00%
Share capital to asset
81.00%
59.00%
Deposit to asset
9.96%
30.00%
share capital to asset is 35-45%. The other 55% should be sourced out from savings
deposit which is cheaper and a higher percentage should be from the reserves of the
cooperative. The finding shows that the share capital to asset ratio of the branch
cooperative was not very far from the standard ratio. This is further supported by the
deposit to total assets ratio, which the branch cooperative had 31% while the main
cooperative had 9.96% only. These findings imply that the branch cooperative was able
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
31
to attract more savings deposit from members, which they could use to finance their
operations, compared to the main cooperative. However, their ratios were way below the
standard ratio of 55-65%.
Policy on Membership of the Two Cooperatives
The branch cooperative can accept a clan or a non-clan member to join the
cooperative while the main cooperative can only accept those who are members of the
clan. This finding relates to the growth of the membership and total asset wherein the
branch had a faster growth than the main because of this policy. A pre-membership
seminar is a requisite in becoming a member to both of the cooperative.
Loan Policies of the Two Cooperatives
The branch cooperative differs to the main cooperative in terms of:
Loan application and release. At the branch cooperative, a member can apply for
instant loan and immediately receive the amount. This type of loan is absent in the main
cooperative. Members has to file an application and wait for the approval of the credit
committee. This takes time because the members of the credit committee come from
different locations so they have to set a time for meeting to approve loan applications.
This is a limiting factor wherein it is a time consuming.
Collection of loans. The branch cooperative has an effective collection tool
wherein it is a daily collection which was adopted from “Bombay” style of credit. It is
advantageous to the cooperative because its liquidity increased The disadvantage is that
the cooperative has to employ a collector who goes to collect everyday. On the part of the
member-borrowers this is not a problem since they are traders, holding cash everyday so
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
32
they could easily give their payment. The main cooperative follow a monthly installment
basis and full payment scheme basis.
The main cooperative was still on the traditional policy while the branch coop
adopted new policies such as:
Share capital build-up. The branch had this type of policy wherein members can
build their share capital through repayment of their loans. Share capital build-up scheme
was put up by the cooperative to increase the share capital of its members. This also can
allow the members to loan higher amounts if they have bigger share capital. This policy
was not adopted by the main cooperative.
Instant loan. The branch cooperative had this type of loan which is absent in the
main cooperative. This loan services is patterned on the “Bombay Style” where payment
of loan is done on a daily “hulugan”. This particular loan service has three stages. Stage 1
and 2 is a training period for members to develop and practice capital Build-Up as they
borrow and pay their loans. This is also a way for the members to prove their credibility,
and capability to handle and manage small amount entrusted to them.
a.) Stage 1- Members may start to avail of loan amounting to PhP1, 000.00
without collateral. If they maintain a good record, P 1,000.00 is added to their succeeding
loans until they reach P5, 000.00. A Sample loan schedule is presented in Exhibit 1.
b.) Stage II- Members can avail of loan amounting to P5,000.00 to P10,000.00
with their share capital as collateral. A sample loan schedule is presented in Exhibit 2.
c.) Stage III- Members may avail a maximum loan of an amount equivalent to
their share capital plus fifty percent. The additional 50% must not exceed P20, 000.00. A
sample loan schedule is presented in Exhibit 3.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
33
The requirements for stage III loan include: 1) at least P 10,000.00 Share Capital;
2) must have undergone stages 1& II; 3) must have a good record during stage I & II; 3)
positive record of the ocular inspection of the area where the business is to be
undertaken; and 4) must be a resident of Baguio City or Benguet Province.
Sustainability of the Branch Cooperative
The computed financial performance of the branch implies that the branch can
sustain its credit operation. It can yield income from its asset, it can meet its short
obligations and can service its members’ withdrawals. In addition, its operational self-
sufficiency ratio is very high. This means that it can sustain its operation since it has very
high operational self sufficiency ratio. The rate on members’ share capital is enough to
convince and recruit more members. The high liquidity ratio implies that it can service
the withdrawals of the members anytime. Furthermore, the positive and fast growth of the
membership and total asset leads to concluding that the branch cooperative can be able to
sustain its operation
Based on the survey questionnaires, most of the respondents were satisfied by the
services of the cooperative. This implies that the level of patronage of the members is
very high that concludes the quality services the cooperative is offering. This also means
that it can sustain its own operation and sooner will grew into a large cooperative since it
has been servicing its members for the past 4 years since it was established as a branch
cooperative.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
34
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
The BRUPEMCO started as a clan organization aimed at helping other members
of the clan who are in need of financial assistance. After 10 years of continuous
operation, a proposal by Mr. Belino Dionisio to share and open the services of the
cooperative so other non-clan members was presented to the Board of Directors and was
approved. This led to the creation of the branch cooperative. To make sure that the
opening of the branch does not affect in any way the operation of the main office, the
following safeguards were formulated: 1.) The branch must be operated first on a 3 year
test run status to find out its feasibility and viability. This started on January 1, 2004 to
December 31, 2006. 2.) The branch must be an independent system so as not to affect the
operation of the main cooperative.
This study was therefore conducted to evaluate the performance of the branch
cooperative from the standpoint of the members, make some comparisons between the
main cooperative and the branch cooperative in terms of asset and membership growth
and financial performance. The study also documented the credit policies of the branch
that differs from the main cooperative.
This study was conducted at the BRUPEMCO-branch office at M&G building 3rd
floor, KM 5, Pico, La Trinidad, Benguet last January 2009. The first hand information
were gathered from the branch manager, the treasurer of the main cooperative through an
interview. A survey questionnaire was floated to 50 member-respondents while the
secondary data were taken from the annual reports, financial statements, credit policies
and studies already conducted.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
35
The finding showed that majority of the respondents availed of the stage 1 and
stage 2 loan windows. Very few availed of the third window loan and the CMLPP.
Majority of the respondents joined the cooperative to have access to its services
specially the loan and savings and time deposits. In terms of the level of fulfillment of
their purposes majority mentioned that they always have easy access to credit and
savings and time deposits. Their purpose of visiting other places through field trips of the
cooperative was never fulfilled. The respondents also said that they are always satisfied
with the services of the cooperative.
The findings showed that the branch cooperative had a faster growth in total asset
and membership. Asset increased faster in the branch because members deposited their
money as share capital in the cooperative. A limiting factor to the main cooperative’s
growth in membership is its membership policy, which is only clan members can join the
cooperative. The financial performance of the two cooperatives showed a sign of good
operation. Based on the 2007 and 2008 financial statements of the two cooperatives, the
computed financial ratios showed that they both had an excellent financial performance.
However, they had a bit difference in the asset yield and rate of returns on members’
share which the branch had higher merit than the main. In liquidity, the branch was more
liquid than the main. This means that the branch has the ability to service its members’
withdrawals on time. The two cooperatives’ assets were invested in the portfolio which
indicates a negative sign to both of the cooperative. In incase of delinquency; the assets
will not be enough when there are sudden withdrawals. The branch also had more deposit
as one of the source of capital; however they were both below the standard ratio.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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The branch has credit policies that are different from the main cooperative. It has
instant loan and share capital build-up scheme which were both absent in the main. The
loan processing in the main is more time consuming. As to membership policies, the
branch accepts clan or non clan members to join the coop while the main accept clan
members only.
The branch cooperative based on the computed financial performance showed a
good sign that it can sustain its operation.
Conclusions
Based on the findings of this study, the following conclusions were formulated:
1. The growth BRUPEMCO-branch in terms of total asset and membership was
faster than the main. The financial performance of the branch cooperative based on the
efficiency measures showed that it has the ability to sustain its operation for the
immediate succeeding years. The high liquidity ratio indicates that it has more than
enough cash to sustain its operations, including the withdrawals on savings deposit.
However, both cooperatives present a not good picture of the asset structure especially in
the ratios on loans receivable and deposit to asset which did not meet the standards.
2. The branch has credit policies which were not adopted by the main.
3. Based on the purpose of the respondents in joining the cooperative, it can be
concluded that majority of the members joined the cooperative because of what it can
provide them. And since majority of the respondents were benefited by the services of the
cooperative, this means that the cooperative is providing excellent services to its
members. Furthermore, it implies that the cooperative services are patronized by majority
of the members.
Benguet Rural People’s Multipurpose Cooperative-Branch
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4. Based on the result of the study, the cooperative can sustain its operation in the
succeeding years.
Recommendations
1. The branch cooperative shall review and revise some of its policies regarding
savings deposit especially long term deposit. It is too risky for the cooperative.
2. Members should continuously patronize the cooperative inorder that the
excellent financial performance would be maintained. On the other hand, the cooperative
should once in a while brings its members who had no exposure to other big and
successful cooperatives as an eye opener. In this way the members would appreciate the
important role of the cooperative as an agent of economic change.
3. The main cooperative shall adopt some of the branch cooperative’s credit
policies. This can help motivate the faster growth of the main cooperative.
4. The branch cooperative can now separate as one cooperative. Its track record
showed that it can stand alone as an independent cooperative.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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LITERATURE CITED
DIONISIO, BELINO.2008. Manager, Benguet Rural People’s Multipurpose
Cooperative Branch. La Trinidad Benguet.
PALISTA, M. D. 2007. Benguet Rural People’s Multipurpose Cooperative: A
Documentation. BS Thesis. Benguet State University, La Trinidad, Benguet.
VICTOR, A.K. 2008. Members’ Perceived Benefits From the services. Benguet
Rural Peoples’ Multipurpose Cooperative. BS Thesis. Benguet State University,
La Trinidad, Buenguet. Pp 16.
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Appendix A
Communication Letter to the Manager
DEPARTMENT OF AGRICULTURAL ECONOMICS AND AGRIBUSINESS
MANAGEMENT (DAEAM)
Benguet State University
La Trinidad Benguet
January 2008
Dionisio Belino
Branch Manager
Benguet Rural People’s Multipurpose Cooperative Branch
3rd Floor M&G Building Km5 Pico, La Trinidad Benguet
Sir:
Warm greetings!
In connection with my research on Benguet Rural People’s Multipurpose
Cooperative Branch: A case Study 2008-2009 of Benguet State University. I have
the honor to request permission to conduct study and float my questionnaires to
your member-borrowers and prospect members in relation to their benefits
derived from the cooperative.
Thank you very much for your favorable action regarding this request.
Your favorable action will be highly appreciated.
Sincerely Yours,
NGAYA-AN, DONWIN B.
(Researcher)
Noted:
EVANGELINE B. CUNGIHAN
Adviser
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Appendix B
LETTER TO THE RESPONDENTS
DEPARTMENT OF AGRICULTURAL ECONOMICS AND
AGRIBUSINESS MANAGEMENT (DAEAM)
Benguet State University
La Trinidad Benguet
SIR/MADAM,
I, DONWIN B. NGAYA-AN, Fourth year Agri-business major in
Cooperative Management of Benguet State University. I am presently a research
titled “BENGUET RURAL PEOPLE’S MULTIPURPOSE COOPERATIVE
BRANCH: A CASE STUDY” as a partial requirement for the degree.
In this connection, may I request a portion of your most precious time to
answer the attached questionnaire and please give your honest answer. Rest
assured that all information you provide would be treat with utmost
confidentiality.
Thank you very much for sharing me a part of your most precious time. God
Speed!
Sincerely Yours,
DONWIN B. NGAYA-AN
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
41
Appendix C
Survey Questionnaire
I. Respondent profile:
1. Name (optional):______________________
2. Educational attainment:
( ) Elementary ( ) College
( ) High school ( ) Vocational courses
3. Main source of income/occupation:_____________________________
4. Number of years in the cooperative:_____________________________
II. Benefits and Reasons
Legend: 1-Never 3- Often
2-Sometimes 4-Always
* Please put a check on your choices and rate.
1. What are your reasons in joining the cooperative?
Reasons
1
2
3
4
( ) To have an easy access to credit.
( ) To have easy access to savings deposits
( ) To contribute my knowledge and skills
through training and seminars
( ) To gain knowledge and skills through
training and seminars
( ) To visit other places through field trips
( ) Others(pls. specify)
Benguet Rural People’s Multipurpose Cooperative-Branch
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2. What benefits did you receive from the cooperative?
Services availed
Benefits derived
Savings and time deposit
( ) higher interest rate than the bank
( ) no with holding tax deducted from interest
( ) I feel satisfied when I contribute to the funds of
the cooperative
( ) I feel at peace that my money is safe in the
cooperative
( ) Others(specify)_____________________
Loan services
( ) interest rate and other charges are lower than
other lending institutions
( ) loan requirements and terms are less strict than
the bank
( ) I can easily avail of loan in times of need.
( ) can borrow higher amount from the coop than
from the bank
( ) Others (specify) __________________
Mutual benefit fund
( ) For business capital
( ) For future use
( ) others (specify) ____________________
3. Did you avail of the mutual benefit fund?
( ) Yes
( ) No
4. How many times did you avail of the loan services of the coop?
Loan Services
Number of times availed since
2007
A.) Instant loan:
1.Stage I
______
2.Stage II
______
3.Stage III
______
B.) Short trip loans
______
C.) Third window loans
______
D.) Coop-member Livelihood Partnership ______
Program(CMLPP)
Benguet Rural People’s Multipurpose Cooperative-Branch
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5. What trainings and seminars attended?
( ) Pre-membership Seminar (PMES)
( ) Share capital build-up
( ) Others (pls. specify)
6. What is your extent of satisfaction in terms of time while waiting the
process of a service?
Services
Always
Often
Sometimes
Never
1.Savings
Deposits:
a. Deposit
b. Withdrawal
2. Loan:
a. Application
of loan
b. Release of
loan
c. Repayment
of loan
7. What is the extent of your satisfaction in terms of interest rate on savings and
Time deposits?
( ) Always
( ) Often
( ) Sometimes
( ) Never
8.) What is the extent of your satisfaction in terms of interest rate on loans?
( ) Always
( ) Often
( ) Sometimes
( ) Never
Benguet Rural People’s Multipurpose Cooperative-Branch
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Exhibit 1
: Period of Loan - 30 days
Loan
Daily
Total
Share
Service
Filling
Hulog
Capital
Fee
Fee
P1,000.00
P50.00
P1,500.00
P410.00
P60.00
P30.00
2,000.00
100.00
3,000.00
820.00
120.00
60.00
3,000.00
150.00
4,500.00
1,230.00
240.00
120.00
4,000.00
200.00
6,000.00
1,640.00
240.00
120.00
5,000.00
250.00
7,500.00
2,050.00
300.00
150.00
Exhibit 2
Period of Loan- 2 months
Loan
Daily
Total
Share
Interest
Service
Filling
Hulog
Capital
On Loans Fees
Fees
P 5,000.00 P 100.00
P 6,000.00 P 600.00
P 200.00
P 150.00
P 150.00
6,000.00
120.00
7,200.00
720.00
240.00
180.00
60.00
7,000.00
140.00
8,400.00
840.00
280.00
210.00
70.00
8,000.00
160.00
9,600.00
960.00
320.00
240.00
80.00
9,000.00
180.00
10,800.00 1,080.00
360.00
270.00
90.00
10,000.00 200.00
12,000.00 1,200.00
400.00
300.00
100.00
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
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Exhibit 3
Stage 3
Period of loan 6 months
Interest 2%
Service fee 1.5%
Filing fee .5%
Share Capital (Php)
Loan (Php)
10000
15000
14000
20000
17000
25000
20000
30000
24000
35000
28000
40000
34000
50000
40000
60000
Benguet Rural People’s Multipurpose Cooperative-Branch
(BRUPEMCO) / Donwin B. Ngaya-an. 2009
Document Outline
- Benguet Rural People�sMultipurpose Cooperative-Branch (BRUPEMCO)
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- REVIEW OF LITERATURE
- METHODOLOGY
- RESULTS AND DISCUSSION
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- LITERATURE CITED
- Appendix