BIBLIOGRAPHY BANGSOYAO, MELITA D. APRIL 20009....
BIBLIOGRAPHY
BANGSOYAO, MELITA D. APRIL 20009. Causes of loan delinquency and
control practices of La Trinidad Vegetable Trading Post Multipurpose Cooperative,
Benguet State University. La Trinidad, Benguet.
Adviser: Luke E. Cuangey, BSc
ABSTRACT
This study looked into the causes of loan delinquency and control practices of the
La Trinidad vegetable Trading Post Multipurpose Cooperative in La Trinidad Benguet.
Specifically, the study aimed to determine; a)the loan that was mostly availed by
the members-borrowers; b) the factors causing loan delinquency; c)the practices of the
La Trinidad Vegetable Trading post Multipurpose Cooperative to control loan
delinquency; d)The preventive actions perceived by the cooperative; and e) the measures
employed by the cooperative to lessen/ reduce delinquencies.
The unstable price of vegetable was identified as the major factor that causes loan
delinquency because it affects their profit very day.
The reason behind of this was the strong competition of the vegetable coming
from different municipalities, provinces and regions in regards with quality, color and
sizes of the product.
The cooperative mentioned that they have the practices to lessen the loan
delinquency like giving some reminders letters to the borrowers.
The cooperative preventive actions to reduce the loan delinquency were;
informing the borrowers to their duties and responsibilities and strictly implement their
policies especially on the terms and condition of the loan. In addition, the officers/staff
should be explained well their duties upon releasing the loan.
The respondents; suggested that an action to lessen the amount of delinquent loan
is to let the borrowers re structure their past due loans, strict implementation of the
policies was also recommended by the respondent.
ii
TABLE OF CONTENTS
Page
Bibliography...…………………………………………………………………… i
Abstract…………………………………………………………………………... i
Table of Contents………………………………………………………………... iii
INTRODUCTION
Background of the Study…………………………………………………. 1
Statement of the Problem………………………………………………… 3
Objectives of the Study…... ……………………………………………… 3
Importance of the Study…………………………………………………… 4
Scope and Limitation of the Study……………………………………….. 4
REVIEW OF LITERATURE
Loan Delinquency………………………………………………………… 5
Factors Affecting Loan Repayment Delinquencies………………………. 5
Causes of Loan Delinquency……………………………………………… 6
Practices to Control Loan Delinquency…………………………………... 6
Measure Employed by the Cooperative………………………………….. 7
Collecting loans…………………………………………………………… 7
Problems Encountered in Collecting of Loans ..………………….....…… 8
Attitudes of Members toward Repayment of Loans…………………… 8
Loan Security…………………………………………………………... 8
Requirement in Releasing Loans………………………………………. 9
METHODOLOGY
Locale in time of the study .................................................................. 10
Respondent of the Study ..................................................................... 10
Data Collection ..................................................................................
10
Data Gathered...................................................................................
10
Data Analysis ....................................................................................
10
RESULTS AND DISCUSSION
Profile of the Respondent……………………………………………….. 11
Type of Loan Mostly Availed of
by the Member-Borrowers………………………………………………. 12
Factors Causing Loan Payment Delinquency…………………………… 14
Problem Encountered by the Members-borrowers
on Loan Payment………………………………………………………… 15
Problems Encountered by the LTVTP-MPC
Officers and Staff in Releasing Loans .................................................... 18
Practices of the LTVTP-MPC to Control Loan Delinquency……………. 18
Preventive Actions to Control Loan Delinquency as Perceived
by the Respondent and La Trinidad Vegetable Trading Post
Officers and Staff…………………………………………………………. 19
Measures Employed by LTVTP-MPC
to Control loan Delinquency
Trading Post Multi-purpose cooperative………………………………….. 20
Orientation on Terms and Conditions of Loan………………………….... 21
Mode of Collecting the Loan Payment……………………………………. 22
Suggested solutions by the Officers and Staff
to Reduce Loan Delinquency……………………………………………... 23
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary………………………………………………………………….. 25
Conclusions……………………………………………………………….. 27
Recommendations………………………………………………………… 28
LITERATURE CITED…………………………………………………………… 29
APPENDIX ………………………………………………………………………. 30
A. Letter to the Respondents……………………………………………… 30
B. Letter to the Manager………………………………………………….. 31
C. Survey Questionnaire for Cooperative Officer and Staff……………… 32
D. Survey Questionnaire for Member- Borrowers……………………….. 37
1
INTRODUCTION
Background of the Study
The growth of cooperatives in a community is hindered by many factors such as
the lack of proper understanding and internalizing the cooperative principles and
philosophies by the member’s ad persons managing the cooperative and the lack of
adequate knowledge and skills in cooperative management. Most cooperatives do not
even install adequate safeguard against unscrupulous officers and staff who take
advantage of their position to grant loans illegally to themselves, relatives, and to
acquaintances.
It has been noted that cooperative with lending services are primarily faced with
the problem on loan delinquency which if not properly managed and accounted for would
result to tremendous financial loss. Furthermore, this would lessen the members trust and
confident in the cooperative. This means that loan delinquency is a problem in a
cooperative that needs an immediate attention and solution if the cooperative aims to
exist longer to serve its members. The occurrence of loan delinquency is a circumstance
that any cooperative could not avoid; however, it should be controlled or minimized so
that it will not hamper the cooperative’s operation that would probably lead to its
bankruptcy
The La Trinidad Vegetable Trading Post Multipurpose Cooperative was
registered on September 9, 1992 with the cooperative authority (CDA). It was first name
as La Trinidad Vegetable Trading Post Allied Service Cooperative and later it was
amended.
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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Record shows that the cooperative started its operation with an initial build-up
share capital of thirteen thousand five hundred pesos (Php. 13, 00) this sum was
contributed by the 15 member-incorporators they contributed 900.00 peso each.
The incorporators are:Atty. Narciso B. Bolislis, Rose Alangdeo, Murphy Paayas,
Josephine Isabelo, Adolfo Pendong, Bernadette Santos, Mary Badilla, Ignacia Malinias,
Ignacia Malinias, Juana Bay-an, Simpicia Pocle, Jason Erico, Saturnino Gawec, Ofelia
Iqualdo and Cresencia Fransisco
These incorporators were the board of directors of trustees and officers of the La
Trinidad Vegetable Trading Post Association Inc. This was an association of booth
holders.
The officers of the Bagsakan Association joined the cooperative by virtue of the
resolution of joint undertaking initiated by the CDA. In the course of time, many
members joined the cooperative.
These were; private and government employees, businessmen, businesswoman,
traders and producers engaged in the vegetable industry, as of December 31, 20007 the
total members of the cooperative was 3,089.
The foregoing remarkable growth of the cooperative in ten years, speaks well of
the loyalty of the members, the strong members, determination, and commitment of the
management staff as well as the BOD and the committee members in the beginning
years. The continued working interest and dedication to the cooperative deserves merit.
The La Trinidad Vegetable Trading Post Multi-Purpose Cooperative is not spared
from the problem on loan delinquency. Therefore, this study was conducted mainly to
Causes of loan delinquency and control practices of La Trinidad Vegetable
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determine the causes of loan delinquency and the practices of the cooperative in solving
this problem.
Statement of the Problem
This study attempted to look into the factors affecting loan payment and control
practices of the LTVP-MPC and in order to explain the problem and look into the
possible solutions.
Specifically, the study sought to answer the following:
1. What is the type of loan mostly availed of by the borrowers?
2. What are factors causing loan delinquencies?
3. What are the practices of the LTVP-MPC to control loan delinquency?
4. What are the preventive actions perceived by the cooperative?
Objectives of the Study
The specific objectives of the study are the following:
1. To find out the type of loan mostly availed by the borrowers.
2. Find out the factors causing loan delinquencies.
3. To identify the practices of the LTVP-MPC to control loan delinquencies.
4. To find out the preventive actions undertaken by the LTVP-MPC to control
loan delinquencies.
5. Find out measures employed by the cooperative to reduce loan payment
delinquencies.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Importance of the Study
One of the common and serious problems that most cooperatives incur in loan
delinquency. This has been a perennial problem affecting cooperatives whether old or
newly organized. Moreover, many researches pointed out loan delinquencies as the main
cause of bankruptcy among cooperatives.
The result of this study would give information on the carious practices that one
primary cooperative (LTVP-MPC) have done with regard to loan delinquency control.
The identified good practices would be maintained by the cooperatives as basis or
guide in formulating their lending services policies or strengthening their current policies
on loan.
Scope and Limitation of the Study
This study concentrates primarily on the control practices and factors affecting
loan delinquencies. It also includes the preventive and remedial actions perceived by the
cooperative to control loan delinquencies and the problems that the cooperatives
encounter with regard to loan delinquency control.
The study was conducted at La Trinidad Vegetable Trading Post Multi-Purpose
Cooperative in the municipality of La Trinidad Benguet from December 2008 to January
2009.
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REVIEW OF LITERATURE
Loan Delinquency
Loan delinquency refers to the failure of the borrowers to meet payments of loan
on due time. Supanga (2002) stated that loan delinquency has been a big problem of
cooperatives. The failure to recognize this problem and in statute the necessary remedies
could demoralize both the members and officers that will ultimately lead to the failure of
the cooperative.
Factors Affecting Loan Repayment Delinquencies
Baize (1979) noted that the factors affecting loan repayment delinquency in banks
are farmers, and characteristics of borrowers which include the household size,
educational attainment and experience of borrowers.
Taganas (1979) found out in her study that failure of farmers to pay loan on time
at the maturity was caused by diversion of loan to non-farm activities. This was due to
late release of the loan motivated them to divert it to purpose other than the intended
purpose. This condition created in them the attitude of spending the loaned money from
the bank elsewhere. As a result, nothing was used on the intended purpose.
This further resulted to the extent of selling their house, lands or lots, just to
augment the amount needed for land preparation and other expenditures on cropping
seasons.
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Causes of Loan Delinquency
Supanga (2002) further enumerated the common causes of loan delinquency as;
irrelevance of loan policies, irresponsible processing system, weak collection system,
lack of security loans, poor examples of officers, several loans and lack of cooperative
education.
In addition, Diclas (2005) found out in her study that the causes of loan
delinquency can be minimized right from the making of the loan policies and even after
the loan has been granted. Giving credit counseling to members is a way of improving
lending operations. She recommended that the released loans should be periodically
followed up to assure a viable and healthy project that will guarantee full payment and
satisfaction to cooperative and the borrowers.
Practices to Control Loan Delinquency
Agustin (2000) found out in her study that training decreases delinquency rate.
Through trainings, members of the cooperatives became aware of their duties,
responsibilities and benefits from the cooperative.
Furthermore, Foronda, noted that in case of non-payment of loans, a g race period
is given to the borrowers to pay. The borrowers will set the time he will pay the loan if he
has a valid reason. The bank will issue a foreclosure of the property offered as collateral
when there is a failure to pay the loan. If the borrowers does not repay, he will deprive of
future loans from the cooperative.
Pozel (1981) stated that establishing a good working relationship with the
cooperative can go along the way. He feels sure that many relationships have been
Causes of loan delinquency and control practices of La Trinidad Vegetable
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unsuccessful as a result of an incomplete understanding between the lender and the
borrower. He also noted that standing and the character of the members and of his job,
the desirability of his property, the size of the capital, and the amount and length of loan
to ensure that the loans be repaid.
Measures Employed by Cooperatives
Agustin (2000), found out in her study that majority of his respondent said
training decreases delinquency rate while the rest of the respondents who agreed that rate
went down due to trainings supported their answers with the following reasons: members
of the cooperative became aware of their duties and responsibilities as members and
became aware of their benefit from cooperative.
This implies that most members of both types of cooperative have understood the
advantage of paying their loans of maturity date.
Furthermore, the manager of LTVP-MPC stated that incase of non-repayment of
loans, a grace period is given to the borrowers to pay. The borrower will set the time he
will pay the loan if he has valid reason.
In addition, he stated that establishing a good working relationship with the lender
can go a long way toward establishing a good line of credit.( Agustin, 20002)
Collecting of Loans
Wadasen (2001), stated that repayment capacity of borrowers is the major basis in
the determination of the amount of loan granted. This represents the person’s ability to
use and manage credit wisely as measured by the stable reasonable amount of profit. It is
Causes of loan delinquency and control practices of La Trinidad Vegetable
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a test of economic feasibility of the loan be repaid without difficulty, it is generally
attained if an instrument is profitable.
Problems Encountered in the Collection of Loans
Kiwa-en (2007) noted that cooperative are faced with problems of delinquent
loans due to circumstances which if not properly managed will result in the tremendous
financial set-back and loss of confidence of members-borrowers in the cooperative
lending programs or services
Attitudes of Members Towards Loan Repayment
According to Dequit (2003), her findings shows that the respondents strongly
agreed to the attitude of paying all the obligations on time for them to be a member of
good standing and serve also a model to their other members. Prompt payment leads to a
good status of the cooperative, and for the cooperative to be able to lend money to the
rest of the members too. She said that majority of the members believed that they must be
reminded of their balances before the maturity date for them to prepare and avoid delayed
payments.
Loan Security
Van Horne (1989) stated that many firms obtain credit on an unsecured basis
either because they are new and unproven or because bankers do not highly regard the
firm’s ability to service dept. in order to make a loan, lenders require security that will
secure their risk of loss.
With security, lenders have two sources of loan payment: the cash flow ability of
the firm to service the debt and, if that sources fails for some reason, the collateral value
Causes of loan delinquency and control practices of La Trinidad Vegetable
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of the security will be used. Most lenders will not make a loan unless the firms have
sufficient expected cash flows to make proper servicing debt probable. To reduce their
risk further, lenders require security.
Mostly costly to administer than unsecured loans and that the incremental cost is
passed. On the borrower in the form of fees and higher interest costs that would otherwise
be the case.
Then, if unsecured credit is available somewhere at less total cost, one can be sure
that a borrower will go there to get it. Beyond a point in risk, however, all lenders in the
market will want some type of safeguard in addition to the general credit standing of the
company.
This safeguard can come in the form of security or a set of protective covenants
that afford the lender the ability to take corrective steps prior to maturity if the borrower’s
financial condition should deteriorate. A lender cannot demand security and expect to get
it unless the borrower has no other alternatives. The use of security is negotiated in
keeping with conditions in the overall market for loans.(Van Horne, 1989)
Requirement in Releasing Loans
The requirement submitted by the respondent when they applied loan are; real
state mortgage and fixed deposit certificate and checking account. There are some
reasons why the borrowers will submit requirement. This will serve as the security
measure for the cooperative and also it was a tradition practices of the cooperative (Kiwa-
en, 2007)
Causes of loan delinquency and control practices of La Trinidad Vegetable
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METHODOLOGY
Locale and Time of the Study
The study was conducted in the La Trinidad Vegetable Trading Post Multi-
Purpose Cooperative in La Trinidad, Benguet from December 2008 to January 2009.
Respondent of the Study
The respondent of the study were the delinquent borrowers and staff.
Data Gathering
Gathering data was done by giving survey questionnaire and interview with the
respondent. Secondary data were taken from the annual reports and activity reports.
Data Analysis
The information gathered was analyzed thoroughly with the use of frequency and
percentage.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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RESULTS AND DISCUSSION
Profile of the Respondent
Table 1 presents a brief information regarding the profile of the respondent of La
Trinidad Vegetable Trading Post Multi-Purpose Cooperative as to sex, civil status, age,
and educational attainment.
Sex. Majority ( 80 % ) of the respondent were female and twenty percent ( 20 %)
are male. This implies that majority of the members are females. The reason behind of
this indication was due to the trading business of vegetable requiring female.
Civil status. Majority ( 60 % ) were married,( 10 % ) are widower and ( 30 % ) are
single. The result implies that most of the member-borrowers and officers or staff are
married.
Age. Out of 50 respondents, (40% ) were with in 31-40 years old,( 30%) are with
in 41-50 years old, 20% in 51-60 years old and only( 10%) are with in the bracket of 21-
20 years old. The study shows that most of the respondents are in their middle ages.
Educational attainment. This present that (60% )of the respondent have gone to
high school,( 25% )have gone to college and (15%) finished elementary. This study
implies that the members-borrowers are literate.
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Type of Loan Mostly Availed of by the Member-Borrowers.
The types of loan offered by the La Trinidad Vegetable Trading Post Multi-
Purpose Cooperative are; Regular loan/ Agricultural loan, Emergency loan and special
loan.
From the Table 1 it is noted that Regular loan/ Agricultural loan was the mostly
availed of by the borrowers.
This indicated that most of the borrowers are farmers and the loan was being used
to finance the farm operation and for the continued operation of their farm business.
However, some borrowers mentioned that they also availed of emergency loan
usually for the payment of tuition fees of their children and other urgent needs and some
availed of the special loan purposely for starting capital of other business.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 1.Profile of the respondent
PARTICULAR FREQUENCY %
Sex
37
Female
80
Male
9
20
TOTAL
46
100
Civil status
Single
14
30
Married
28
60
Widower
5
10
TOTAL
46
100
Age(Years)
20-30 years
5
10
31-40 years
18
40
41-50 years
14
30
51-60 years
9
20
TOTAL
46
100
Educational Attainment
Elementary
12
25
High school
28
60
College
6
15
TOTAL
46
100
Types of Loan mostly availed of by
the borrowers
Regular loan
32
70
Emergency loan
9
20
Special loan
5
10
TOTAL
46
100
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Factors Causing Loan Payment Delinquency
Table 2 Shows the perceived factors affecting loan payment delinquency by the
respondents. Thirty percent (30%) of the officers and staff and fifty percent (50%) of the
borrowers said that the unstable price of the vegetable was the most common factors that
contributed to loan delinquencies. The reason behind this was the uncontrolled supply of
vegetables coming from the different municipalities, and provinces that competed with
the local production. The respondents also mentioned that the competition of the poor
quality and packaging of the vegetable contributes a lot to a low price of the vegetable.
Twenty percent (20%) each of the officers and the member-borrowers said that
they usually used the loan for not intended purposes especially in time of emergency.
Thirty percent (30%) of the officers, staff ant ten percent (10%) of the borrowers
said that bankruptcy of their business was one of the factors affecting the delayed
payment of the borrowers.
On the other hand ten percent (10%) of the member-borrowers and another
(10 %) of the officers and staff mentioned that the bankruptcy of their business was due
to the natural calamities which was a big contribution affecting the payment on their loan.
This result indicates that the unstable price of the vegetable was the major factor
affecting the payment of the borrowers as perceived by both the officers and member-
borrowers. The difficulty in disposing the vegetable and mechanical damages resulting to
a lower price of the product thus less profit was realize due to physical damages resulted
to less profit of the farmers which contributed to their delinquency.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 2. Factors causing loan payment delinquency
FACTORS
OFFICERS AND
DELINQUENT
STAFF
BORROWERS
FREQ
%
FREQ
%
Used loans for other purpose
3
20
8
20
Unstable price of vegetable
4
30
25
50
Bankruptcy of livelihood or business
4
30
5
10
Natural calamities
2
10
4
10
Distance from home
2
10
4
10
TOTAL
15
100
46
100
Problem Encountered by the Member-borrowers
on Loan Payment
Table 3 shows that (50%) reported the problem and low price of vegetable and
bankruptcy of their business due to the rejected products was commonly encountered by
the borrowers. There were 40% of the respondent who said that they had not enough
money during the collection time
Ten percent (10%) indicated that natural calamities and unwanted accident
contributed to their delayed payment on their loan.
The respondent reason for not having enough money during the collection time
was their vegetables were not yet paid, the buyers did not pay the full amount they agreed
and also because of the low price.
Another reason mentioned by the respondent was due to the natural calamities on
themselves or in their children.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 3. Problems encountered by the members-borrowers on loan payment
PROBLEMS
FREQUENCY
%
Low price of vegetable
23
50
No
money during the
18
40
collection
Natural Calamities
(Unwanted accident)
5
10
TOTAL
46
100%
Natural calamities was due to the typhoons, instances were; there stall was
destroyed by the strong typhoon and it in needs renovation. The said reason was usually
the time that they will use the loaned money.
Problems Encountered by Officers and Staff
In Releasing Loans
Table 4 indicated that the most common problems they encountered in granting
loans are the lack of document or insufficient documents that caused the delayed
approval and release of loans.
Another problem was that the improper usage of loaned money. Instances were; they
used the money in non-business purpose like; housing, tuition fee and payment for other
debt. This result to borrower’s delinquency.
It was also mentioned that there were instances where some documents were lost
or it were arranged thus, it is difficult to find them.
In controlling loan delinquency, the respondents mentioned that the negative
attitudes of the borrowers were the biggest problem they are having. They enumerated
some of the bad behaviors of the borrowers such as; borrowers fabricated stories just to
Causes of loan delinquency and control practices of La Trinidad Vegetable
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have a reason why they could not pay, some borrowers also would hide or run-away if
they see the collectors, they sent a another person to represent them if there are important
matters to be discussed and the intention of not visiting the cooperative.
Table 4. Problems encountered by the officers and staff in releasing and controlling loans
PROBLEMS ENCOUNTERED
FREQUENCY
%
Releasing Loan
Lack of document or insufficient document.
14
30
Improper use of loan or not intended
28
60
for the purpose applied
TOTAL
46
100
Controlling Loans
Negative attitudes of the borrowers.
28
60
Transfer residence of the members-borrowers.
9
20
Lack of commitment among officers.
9
20
TOTAL
46
100
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Practices of the LTVTP-MPC to Control Loan Delinquency
The respondents were asked to identify what remedial actions they perceived to
control loan delinquency. It is noted that notices and reminder letters to the delinquent is
one of the primary remedial action done by the cooperative.
The respondent also mentioned that letting the delinquent borrowers to do and sign
promissory note on when to pay helped the cooperative and the borrowers lessened the
unpaid loans.
Preventive Actions to Control Loan Delinquency as Perceived
by the Respondent and Officers and Staff
Preventive actions are shown in the Table 5. Most of the respondent agreed that
the preventive actions they must use are by informing the borrowers on their
responsibilities and duties such as their payment on time and strictly implement the
policies as to loan payment.
Table 5. Practices of the LTVP-MPC to control loan delinquency
PRACTICES
FREQUENCY
%
Send notices and collection letters to the
9
60
delinquent members.
Let the delinquent do promissory note
6
40
on when to pay and
Design a plan of payment with
delinquents and strictly implement it
TOTAL
15
100
Causes of loan delinquency and control practices of La Trinidad Vegetable
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On the other hand the cooperative speaks a lot of the screening of the applicants
thoroughly to ensure that borrowers would use the borrowed money to the intended
purpose. Project monitoring should be conduct regularly. The respondents said that by
sending the person in charged in loan releasing to conduct a seminar regarding the loan
policies would help lessen the occurrence of the loan delinquency.
Lastly the respondents also mentioned that loan forms must be properly filled-up
by the borrowers and this forms would be kept properly at the cooperative office. The
terms and conditions of loan should be well explained to the borrowers.
However some of the said preventive actions were not implemented sometimes. It
is difficult to collect from busy businessmen.
Table 6. Preventive actions to control loan delinquencies by the LTVTP-MPC officers
and staff
PREVENTIVE
FREQUENCY
%
Inform the borrowers on their responsibilities and duties
6
40
such as their payment on time
Maintain up-to-date and accurate records on the loans of
4
30
all borrowers.
Strictly implement the loan forms should be proper filled-
up by the borrowers and filed at the cooperative office.
The terms and conditions of the loan should be properly
2
10
explained to the borrowers
Conduct regular monitoring
3
20
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Measures Employed by the La Trinidad Vegetable
Trading Post Multi-purpose Cooperative
The La Trinidad Vegetable Trading Post multi-purpose Cooperative officers and
staff enumerated some measure employed by them to reduce loan delinquency. Table 7
shows that 40% of the respondent said they conduct seminars and meeting such as pre-
membership seminar and financial counseling so that they will have enough knowledge
on where to use and when to pay their loan on time. This finding shows that training may
decrease the loan delinquency.
Twenty percent (20%) mentioned that continuous education and training is
important since it helps members to be active and learn more knowledge on how to
handle money and used it for intended purpose. Thirty percent(30%) shows that personal
approach by the collector or officer can also help reducing the loan delinquency where in
they can personally converse and get the reasons for the delayed payment of their loan
and they cay discuss, suggest a remedies and solutions. Ten percent (10%) shows that the
members also need a reminder letter for them to be prepared on the due date.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 7. Measures employed by the La Trinidad Vegetable Trading Post Multi-purpose
Cooperative to reduce loan delinquency
MEASURES
OFFICERS AND STAFF
FREQUENCY
%
Conducting financial counseling and seminar
6
40
Reminding their balances before due date.
2
10
Personal approach by the collector or officer
4
30
Continues education
3
20
TOTAL
15
100
Orientation on Terms and Conditions of Loan
Table 8 shows that eighty percent (80%) of the respondent, said that the staff
explain the terms and conditions of the loan before releasing the money. There were 20%
who said that the staff do not explain the terms and conditions of the loan specially
during busy hours.
Table 8. Orientation of terms and conditions of loan
RESPONSE
FRREQUENCY
%
Explain
37
80
Do not explain
9
20
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Mode of Collecting the Loan Payment
Table 9 presents the mode of collecting loan payments by the cooperative. Fifty
percent of the respondents said that they personally pay it to the cooperative, 10% said
that they give their payment to a representative, while 40% said they pay through the
collector. However some of the respondent said that they waited for the collector during
the scheduled collection time because of the distance and they don’t have enough time to
visit the cooperative.
Those who personally pay to the cooperative mentioned that they prefer handling
the money to the treasurer because, there were instances that when they send a
representative to pay for them they just find out that they had a balance or unpaid loan.
Those who paid their loans through a representative have no time to visit the cooperative
so they just entrust their payments to someone they know who is going to the
cooperative.
Table 9. Mode of collecting loan payment by the La Trinidad Vegetable Trading Post
Multi-purpose Cooperative
MODE OF COLLECTION
FREQUENCY
%
They personally pay it to the
23
50
cooperative
They give to someone or
9
10
representative
Through the collector
18
40
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Suggested solutions by the Officers and
Staff to Reduce Loan Delinquency
Table10 presents the solutions suggested by the officers and staff of the LTVTP-
MPC to reduce loan delinquencies. Fifty percent (50%) mentioned that by strict
implementation of policies, rules and regulation regarding loans is the most preventive
way to avoid loan delinquencies.
Thirty percent (30%) of the officers and staff identified that possible solution to
reduce loan payment delinquencies is by re-structuring the loan. Ten percent(10%) of the
officers and staff also said that other possible solution is by sending demand letter to the
borrowers.
Ten percent (10%) observed that sending officers or collector to the borrowers
gives a capacity to the members to pay especially those staying in far places contributed
to lessening loan delinquency.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 10. Suggested solutions of the La Trinidad Vegetable Trading Post Multi-purpose
Cooperative
SOLUTIONS FREQUENCY %
Re- structuring of the loan
4
30
Strict implementation of policies
8
50
Sending demand letter
2
10
Sending collector or officer to collect
1
10
Causes of loan delinquency and control practices of La Trinidad Vegetable
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SUMMARY, CONCLUSIONS AND RECOMMMENDATIONS
Summary
This study was conducted to look into the factors affecting loan delinquencies of
La Trinidad Trading post vegetable Multi-purpose Cooperative in La Trinidad Benguet
and the control practices of the cooperative to reduce loan delinquency.
The study was conducted to identify the factors affecting loan delinquencies,
problems encountered by the member-borrowers on loan payment, problem of LTVTP-
MPC in granting loans, measures employed by the coop to reduce loan delinquencies,
preventive and remedial action to control the loan delinquency.
A prepared survey questionnaire was used to collect data for the study. The data were
tabulated and analyzed by using descriptive statistics methods such as frequency and
percentage.
This was conducted at La Trinidad Vegetable Trading Post Multi-purpose
Cooperative with 15 officers and staff and 46 member-borrowers who has been
delinquent of the coop as the respondent.
Findings showed that majority of the respondent were female, married with ages
of ranging 31 to 50 years old.
The study shows that the Agricultural loan/Regular loan has the highest percentage of
delinquencies. The reason is because of the risk in agricultural production, price
fluctuation of vegetable and the weather condition.
It was determined by the study that most of the problems encountered by the
member-borrower on loan payment were; no money during collection, less income for
the day because of low price of vegetables.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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On the other hand, the problems encountered by the cooperative officers and staff
to member-borrowers were; improper using of loans, lack of project monitoring and
insufficient documents.
Solutions employed by the cooperative to control loan delinquency were; consider
the character of member-borrower, sending reminder letter, financial counseling,
continues education regarding their duties and responsibilities and impose strict
collection. The sources of funds for loan payment were commonly from their sales
coming from their farms and also the borrowed money from others
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Conclusion
Based on the findings, the following conclusions are drowned.
1. The borrowers mostly availed of the Agricultural loan.
The reason of this was traders are also a farmer. They mentioned that they
had also a farm but they had a personnel or workers who managed and operate it but they
give a financial support.
2. A big factor that contributes to become a loan delinquent member was not
enough money during collection time and the unstable price of vegetable.
This finding was due to some circumstances, according to them they usually
experienced this during the time that they had received or experience the “bouncing
checks” especially to those new buyers that may lead to the bankruptcy of their business.
3. The preventive actions perceived by the cooperative to control loan
delinquency
Are as follows;
a. Inform their borrowers to their duties and responsibilities such as
paying their loan on time.
b. Implement strict loan policy.
c. Give sanctions or penalty to the late payee.
4. Other problem encountered by the cooperative was the lack of commitment
among the officers and the transferred residence of the borrowers.
According to the respondent, some of the officers and staff do not attend
some of the regular meetings and activities of the cooperative. They only visit the
cooperative when they wanted something.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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5. The remedial actions perceived by the officers and staff was to send
reminder letters in advance or a week before the due date for them to prepared their
payment or earlier.
Recommendations
For Members-borrowers
1. Borrowers should practice the habit of paying their loan on time.
2. Schedule a time to pay and set aside money for paying loans.
3. The availed loan should be used in proper purpose and not for luxury or
desires.
4. Members should know their duties and responsibilities once they entered in the
cooperative.
For cooperative officers and staff
1. Loan policies are to be applied and implement strictly on collection of loan.
2. To control loan delinquency the preventive and remedial actions should be
practiced.
3. Continuous counseling regarding loan payment should be provided to member-
borrowers.
4. The officer should be regularly reminding the borrowers before their due date.
5. The coop should come up with an activities or programs that aim to improve
negative way of paying the loan they voluntarily borrowed.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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LITERATURE CITED
AGUSTIN, L.M. 2000. Perceived effects of trainings on the performance of cooperatives
in Kibungan Benguet. BS Thesis. Benguet State University, LaTrinidad
Benguet. Pp 5-6.
AGUSTIN, L.M 2000. Perceived effects of trainings on the performance of cooperatives
in Kibungan Benguet. BS Thesis. Benguet State University, LaTrinidad Benguet.
Pp 5-6.
BIASE, L.A. 1979. Repayment of deficiencies in agricultural loans in Buguias, Benguet.
BS Thesis. Benguet State University, La Trinidad Benguet. P4.
DEQUIT, F.J. 2003. Attitudes of members of selected cooperative in La Trinidad
Benguet towards borrowing and repaying of Loan. BS Thesis. Benguet State
University, La Trinidad Benguet P.18.
DICLAS, J.A. 2005. Management Problems of cooperatives in Baguio City: A
Thesis.Easter College, Inc. Baguio City. Pp. 1-10.
KIWA-EN, D.G.2007. Factors affecting loan payment delinquency of La Trinidad,
Benguet Trading Post Multi Purpose Cooperative in La Trinidad Benguet. BS
Thesis. Benguet State University, La Trinidad Benguet. Pp. 9-12
POZEL, M.C. 1981. Farmers Cooperatives. United States of America Agriculture
Cooperatives Service. P5.
SUPANGA, M.P. 2002. Implementation of loan policies of Philex Employees Credit
Cooperatives in PHILEX, Pacdal, Tuba, Benguet. A Baby thesis. Easter College,
Inc. Baguio City. P. 11.
TAGANAS, P.1979. Repayment deficiencies of agricultural loans in Bontoc, Mountain
Province BS Thesis. Benguet State University La Trinidad Benguet. P.43
VAN HORNE, J.1989. Financial Management and Policy. 8’th ed. Pretice Hall,
Englewood Cliffs, New Jersey. Pp. 489-507.
WADASEN, R.P 2001. Financial management practice of the St. Jude Community MPC
in Buguias, Benguet. An assessment. MS Thesis, Benguet State University, La
Trinidad Benguet. Pp29.
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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APPENDIX A
Letter to the Respondent
College of Agriculture
DEPARTMENT OF AGRICULTURAL ECONOMICS
AND AGRIBUSINESS MANAGEMENT
Benguet State University
La Trinidad, Benguet
January 2009
Dear Respondent,
The undersigned is a fourth year student of Agribusiness in Benguet State University.
Conducting a research entitled “FACTORS AFFECTING LOAN DELINQUENCY
AND CONTROL PRACTICES OF LA TRINIDAD TRADING POST MULTI-
PURPOSE COOPERATIVE”.
In this regard, may I humbly request a portion of your time to answer the attached
questionnaire? Your kindness assistance will enable me to complete the requirement in
due time. Rest assured that all information you provide will be treated with utmost
confidentiality.
Your favor and consideration with regards to this endeavor is fully appreciated.
Respectfully yours,
MELITA D. BANGSOYAO
Researcher
Noted by:
LUKE E. CUANGEY
Adviser
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APPENDIX B
Letter to the Manager
College of Agriculture
DEPARMENT OF AGRIBUSINESS ECONOMICS
AND AGRIBUSINESS MANAGEMENT
Benguet State University
La Trinidad, Benguet
January 2009
Mr. Tanny Atayoc
Manager
La Trinidad Vegetable Trading Post Multi-Purpose Cooperative
Km5. La Trinidad, Benguet
Sir:
Warm Greetings!!!
I, Melita D. Bangsoyao, a student of Benguet State University taking up Bachelor of
Science in Agribusiness major in Cooperative Management. I am presently conducting a
research titled “FACTORS AFFECTING LOAN DELINQUENCY AND CONTROL
PRACTICES OF LA TRINIDAD VEGETABLE TRADING POST MULTI-PURPOSE
COOOPERATIVE” as a requirement for the degree.
In connection, may I request permission to conduct my study and float my questionnaires
to your members?
Thank you very much for your favorable action regarding this request. Your favorable
action will be highly appreciated.
Sincerely yours,
MELITA D. BANGSOYAO
Researcher
Noted:
LUKE E. CUANGEY
Adviser
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APPENDIX C
Survey Questionnaire for Cooperative Officers and staff
(For Cooperative-officers)
I. Information on the Cooperatives
Name of the Cooperative:___________________________________________________
Address: ________________________________________________________________
Number of Years in Operation:_______________________________________________
Types of loan offered: _____________________________________________________
Type of loan mostly availed of the borrowers: __________________________________
Do you have written policies?
Yes_____
No_____
If available, have you been strictly implementing? Yes_____
No_____
Do you have functional credit committee?
Yes_____
No_____
Who are staff involved in loans operation and many of them?
___________Manager
___________Loan clerk
___________Loan officer
___________Collector
___________others, please specify: ____________________________________
II. Practices on Loan Delinquency Control
What are your loan requirements?
___________Share capital
___________Savings deposit
___________Business permit
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____________Co-maker
a) How many co-makers do you require ___________________________
b) What are the qualifications ___________________________________
____________ Collateral
a) What kind of collateral do you accept ___________________________
Do you conduct credit investigation?
Yes_____
No_____
If yes, where do you usually conduct it?
____________ To other cooperatives in the place
____________To other private lending firms operating in the place
____________Others, please specify____________________________________
Do you orient your borrowers on the term and conditions of their loans?
Yes____________
No____________
Do you visit the project where the borrowers used their loan?
Yes____________
No____________
What actions do you undertake if you find that the borrowers did not used their loan for
the intended purpose?
____________ Force to pay or return the loan in the cooperative.
____________ A penalty is imposed.
____________ Disqualify him/her to avail of loans again.
____________ Subject the borrower to strict monitoring.
____________ Others, please specify
How do you collect loans?
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____________The borrowers personally pay it to the cooperative.
____________They just send it to someone who goes to the cooperative.
____________Through the collector.
Do you remind the borrowers regarding their due date?
Yes_____ No_____
If yes, how do you remind them?
___________By giving notice/collection letters.
___________By sending staff.
___________By restructuring the loan.
___________By collecting from their co-makers.
____________Others, please specify____________________________________
If the borrowers cannot really pay after exhausting all remedies, do you subject them to
legal actions?
Yes______
No______
III. Perceived Preventive Actions to control Loan Delinquency.
Put a check mark on the actions you perceived to control the occurrence of loan
delinquency in your cooperative.
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PREVENTIVE ACTIONS
____________Inform the borrowers on their responsibilities and duties such as their
payments on time.
____________ Maintain up-to-date and accurate records on the loans of all borrowers.
____________Strictly implement the loan forms should be properly filled-up by the
borrowers and filed at the cooperative office.
____________The terms and conditions of the loan should be properly explained to the
borrowers.
____________ Give reminders letters.
_____________ Insure that the borrowers comply with all loan requirements.
____________ Screen the loan applicants thoroughly as to their capacity, character and
collaterals.
____________ Insure that the loan of the borrowers is used in its purpose.
____________ Inform co-makers and spouse of the borrowers on their duties and
responsibilities.
____________ Submit reports on loans regularly to the Board of Directors.
____________ Provide satisfactory service to the borrowers.
____________ Employ collectors whose main job is to collect payments from the
borrowers.
____________ Conduct regular monitoring on the project of the borrowers.
____________ Conduct seminar on loans collection for the person involved in it.
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IV. Perceived Remedial Actions to collect Loan Delinquency
Put a check mark on the actions perceived to collect delinquent loans.
REMEDIAL ACTIONS
________________________________________________________________________
___________ Send notices and collection letters to the delinquent, co-makers and spouse.
___________ Ask the help of other officers in the collections.
___________ let the delinquents to do promissory note on when to pay.
___________ Design a plan of payment with delinquent and strictly implement it.
___________ Make collection to the Delinquent’s co-maker and spouse.
___________ Provide amnesty on fines.
V. What problems have you encountered with regards to your loan delinquency control?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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APPENDIX C
Survey Questionnaire for Member-borrowers
(For Members-Borrowers)
I. GEOGRAPHIC INFORMATION
1. Name of cooperative_______________________________________________
2. Address of Cooperative_____________________________________________
II. GENERAL INFORMATION ON THE RESPONDENT
3. Name___________________________________________________________
4. Age_______ 5. Sex_______ Male_______ Female 6. Civil status_______
7. Highest educational attainment
____________ Elementary ____________ High School
____________ College, please specify course_____________________________
1. Position in the cooperative
____________ Officer, specify________________________________________
____________ Manager, specify_______________________________________
III. REPAYMENT OF LOAN
1. What was the latest loan you availed in the cooperative?
________________________________________________________________________
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2. What was the purpose of the loan?
________________________________________________________________________
Type of loan
Amount
Term
Emergency loan
_________________
________________
Agricultural loan
_________________
________________
Others, specify
_________________
________________
4. How did you pay your loan?
_________________________ Through collector from cooperative
_________________________ personally went to the cooperative
_________________________ sent payment through representative
_________________________ Others, specify__________________________________
5. Methods of payment (please check)
____________ Full payment
____________ Installment
____________ Others, specify___________________________________
1. If installment, what were the terms of payment?
____________ Weekly
___________ Installment
____________ Monthly
___________ Annually
2. Describe the maturity period of your loan?
____________ Short
____________ Just enough
____________ Long
____________ Others, specify___________
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V. MEASURES EMPLOYED BY THE COOPERATIVE TO REDUCE LOAN
DELINQUENCY
6. Methods of collecting payments
___________ Full payment
___________ Installment
___________ Others, specify____________________________________
3. If installment, what are the terms of payment employed?
____________ Weekly
___________ Quarterly
others, specify______
____________ Monthly
___________ Annually
Causes of loan delinquency and control practices of La Trinidad Vegetable
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BANGSOYAO, MELITA D. APRIL 20009. Causes of loan delinquency and
control practices of La Trinidad Vegetable Trading Post Multipurpose Cooperative,
Benguet State University. La Trinidad, Benguet.
Adviser: Luke E. Cuangey, BSc
ABSTRACT
This study looked into the causes of loan delinquency and control practices of the
La Trinidad vegetable Trading Post Multipurpose Cooperative in La Trinidad Benguet.
Specifically, the study aimed to determine; a)the loan that was mostly availed by
the members-borrowers; b) the factors causing loan delinquency; c)the practices of the
La Trinidad Vegetable Trading post Multipurpose Cooperative to control loan
delinquency; d)The preventive actions perceived by the cooperative; and e) the measures
employed by the cooperative to lessen/ reduce delinquencies.
The unstable price of vegetable was identified as the major factor that causes loan
delinquency because it affects their profit very day.
The reason behind of this was the strong competition of the vegetable coming
from different municipalities, provinces and regions in regards with quality, color and
sizes of the product.
The cooperative mentioned that they have the practices to lessen the loan
delinquency like giving some reminders letters to the borrowers.
The cooperative preventive actions to reduce the loan delinquency were;
informing the borrowers to their duties and responsibilities and strictly implement their
policies especially on the terms and condition of the loan. In addition, the officers/staff
should be explained well their duties upon releasing the loan.
The respondents; suggested that an action to lessen the amount of delinquent loan
is to let the borrowers re structure their past due loans, strict implementation of the
policies was also recommended by the respondent.
ii
TABLE OF CONTENTS
Page
Bibliography...…………………………………………………………………… i
Abstract…………………………………………………………………………... i
Table of Contents………………………………………………………………... iii
INTRODUCTION
Background of the Study…………………………………………………. 1
Statement of the Problem………………………………………………… 3
Objectives of the Study…... ……………………………………………… 3
Importance of the Study…………………………………………………… 4
Scope and Limitation of the Study……………………………………….. 4
REVIEW OF LITERATURE
Loan Delinquency………………………………………………………… 5
Factors Affecting Loan Repayment Delinquencies………………………. 5
Causes of Loan Delinquency……………………………………………… 6
Practices to Control Loan Delinquency…………………………………... 6
Measure Employed by the Cooperative………………………………….. 7
Collecting loans…………………………………………………………… 7
Problems Encountered in Collecting of Loans ..………………….....…… 8
Attitudes of Members toward Repayment of Loans…………………… 8
Loan Security…………………………………………………………... 8
Requirement in Releasing Loans………………………………………. 9
METHODOLOGY
Locale in time of the study .................................................................. 10
Respondent of the Study ..................................................................... 10
Data Collection ..................................................................................
10
Data Gathered...................................................................................
10
Data Analysis ....................................................................................
10
RESULTS AND DISCUSSION
Profile of the Respondent……………………………………………….. 11
Type of Loan Mostly Availed of
by the Member-Borrowers………………………………………………. 12
Factors Causing Loan Payment Delinquency…………………………… 14
Problem Encountered by the Members-borrowers
on Loan Payment………………………………………………………… 15
Problems Encountered by the LTVTP-MPC
Officers and Staff in Releasing Loans .................................................... 18
Practices of the LTVTP-MPC to Control Loan Delinquency……………. 18
Preventive Actions to Control Loan Delinquency as Perceived
by the Respondent and La Trinidad Vegetable Trading Post
Officers and Staff…………………………………………………………. 19
Measures Employed by LTVTP-MPC
to Control loan Delinquency
Trading Post Multi-purpose cooperative………………………………….. 20
Orientation on Terms and Conditions of Loan………………………….... 21
Mode of Collecting the Loan Payment……………………………………. 22
Suggested solutions by the Officers and Staff
to Reduce Loan Delinquency……………………………………………... 23
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary………………………………………………………………….. 25
Conclusions……………………………………………………………….. 27
Recommendations………………………………………………………… 28
LITERATURE CITED…………………………………………………………… 29
APPENDIX ………………………………………………………………………. 30
A. Letter to the Respondents……………………………………………… 30
B. Letter to the Manager………………………………………………….. 31
C. Survey Questionnaire for Cooperative Officer and Staff……………… 32
D. Survey Questionnaire for Member- Borrowers……………………….. 37
1
INTRODUCTION
Background of the Study
The growth of cooperatives in a community is hindered by many factors such as
the lack of proper understanding and internalizing the cooperative principles and
philosophies by the member’s ad persons managing the cooperative and the lack of
adequate knowledge and skills in cooperative management. Most cooperatives do not
even install adequate safeguard against unscrupulous officers and staff who take
advantage of their position to grant loans illegally to themselves, relatives, and to
acquaintances.
It has been noted that cooperative with lending services are primarily faced with
the problem on loan delinquency which if not properly managed and accounted for would
result to tremendous financial loss. Furthermore, this would lessen the members trust and
confident in the cooperative. This means that loan delinquency is a problem in a
cooperative that needs an immediate attention and solution if the cooperative aims to
exist longer to serve its members. The occurrence of loan delinquency is a circumstance
that any cooperative could not avoid; however, it should be controlled or minimized so
that it will not hamper the cooperative’s operation that would probably lead to its
bankruptcy
The La Trinidad Vegetable Trading Post Multipurpose Cooperative was
registered on September 9, 1992 with the cooperative authority (CDA). It was first name
as La Trinidad Vegetable Trading Post Allied Service Cooperative and later it was
amended.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Record shows that the cooperative started its operation with an initial build-up
share capital of thirteen thousand five hundred pesos (Php. 13, 00) this sum was
contributed by the 15 member-incorporators they contributed 900.00 peso each.
The incorporators are:Atty. Narciso B. Bolislis, Rose Alangdeo, Murphy Paayas,
Josephine Isabelo, Adolfo Pendong, Bernadette Santos, Mary Badilla, Ignacia Malinias,
Ignacia Malinias, Juana Bay-an, Simpicia Pocle, Jason Erico, Saturnino Gawec, Ofelia
Iqualdo and Cresencia Fransisco
These incorporators were the board of directors of trustees and officers of the La
Trinidad Vegetable Trading Post Association Inc. This was an association of booth
holders.
The officers of the Bagsakan Association joined the cooperative by virtue of the
resolution of joint undertaking initiated by the CDA. In the course of time, many
members joined the cooperative.
These were; private and government employees, businessmen, businesswoman,
traders and producers engaged in the vegetable industry, as of December 31, 20007 the
total members of the cooperative was 3,089.
The foregoing remarkable growth of the cooperative in ten years, speaks well of
the loyalty of the members, the strong members, determination, and commitment of the
management staff as well as the BOD and the committee members in the beginning
years. The continued working interest and dedication to the cooperative deserves merit.
The La Trinidad Vegetable Trading Post Multi-Purpose Cooperative is not spared
from the problem on loan delinquency. Therefore, this study was conducted mainly to
Causes of loan delinquency and control practices of La Trinidad Vegetable
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determine the causes of loan delinquency and the practices of the cooperative in solving
this problem.
Statement of the Problem
This study attempted to look into the factors affecting loan payment and control
practices of the LTVP-MPC and in order to explain the problem and look into the
possible solutions.
Specifically, the study sought to answer the following:
1. What is the type of loan mostly availed of by the borrowers?
2. What are factors causing loan delinquencies?
3. What are the practices of the LTVP-MPC to control loan delinquency?
4. What are the preventive actions perceived by the cooperative?
Objectives of the Study
The specific objectives of the study are the following:
1. To find out the type of loan mostly availed by the borrowers.
2. Find out the factors causing loan delinquencies.
3. To identify the practices of the LTVP-MPC to control loan delinquencies.
4. To find out the preventive actions undertaken by the LTVP-MPC to control
loan delinquencies.
5. Find out measures employed by the cooperative to reduce loan payment
delinquencies.
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Importance of the Study
One of the common and serious problems that most cooperatives incur in loan
delinquency. This has been a perennial problem affecting cooperatives whether old or
newly organized. Moreover, many researches pointed out loan delinquencies as the main
cause of bankruptcy among cooperatives.
The result of this study would give information on the carious practices that one
primary cooperative (LTVP-MPC) have done with regard to loan delinquency control.
The identified good practices would be maintained by the cooperatives as basis or
guide in formulating their lending services policies or strengthening their current policies
on loan.
Scope and Limitation of the Study
This study concentrates primarily on the control practices and factors affecting
loan delinquencies. It also includes the preventive and remedial actions perceived by the
cooperative to control loan delinquencies and the problems that the cooperatives
encounter with regard to loan delinquency control.
The study was conducted at La Trinidad Vegetable Trading Post Multi-Purpose
Cooperative in the municipality of La Trinidad Benguet from December 2008 to January
2009.
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REVIEW OF LITERATURE
Loan Delinquency
Loan delinquency refers to the failure of the borrowers to meet payments of loan
on due time. Supanga (2002) stated that loan delinquency has been a big problem of
cooperatives. The failure to recognize this problem and in statute the necessary remedies
could demoralize both the members and officers that will ultimately lead to the failure of
the cooperative.
Factors Affecting Loan Repayment Delinquencies
Baize (1979) noted that the factors affecting loan repayment delinquency in banks
are farmers, and characteristics of borrowers which include the household size,
educational attainment and experience of borrowers.
Taganas (1979) found out in her study that failure of farmers to pay loan on time
at the maturity was caused by diversion of loan to non-farm activities. This was due to
late release of the loan motivated them to divert it to purpose other than the intended
purpose. This condition created in them the attitude of spending the loaned money from
the bank elsewhere. As a result, nothing was used on the intended purpose.
This further resulted to the extent of selling their house, lands or lots, just to
augment the amount needed for land preparation and other expenditures on cropping
seasons.
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Causes of Loan Delinquency
Supanga (2002) further enumerated the common causes of loan delinquency as;
irrelevance of loan policies, irresponsible processing system, weak collection system,
lack of security loans, poor examples of officers, several loans and lack of cooperative
education.
In addition, Diclas (2005) found out in her study that the causes of loan
delinquency can be minimized right from the making of the loan policies and even after
the loan has been granted. Giving credit counseling to members is a way of improving
lending operations. She recommended that the released loans should be periodically
followed up to assure a viable and healthy project that will guarantee full payment and
satisfaction to cooperative and the borrowers.
Practices to Control Loan Delinquency
Agustin (2000) found out in her study that training decreases delinquency rate.
Through trainings, members of the cooperatives became aware of their duties,
responsibilities and benefits from the cooperative.
Furthermore, Foronda, noted that in case of non-payment of loans, a g race period
is given to the borrowers to pay. The borrowers will set the time he will pay the loan if he
has a valid reason. The bank will issue a foreclosure of the property offered as collateral
when there is a failure to pay the loan. If the borrowers does not repay, he will deprive of
future loans from the cooperative.
Pozel (1981) stated that establishing a good working relationship with the
cooperative can go along the way. He feels sure that many relationships have been
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
7
unsuccessful as a result of an incomplete understanding between the lender and the
borrower. He also noted that standing and the character of the members and of his job,
the desirability of his property, the size of the capital, and the amount and length of loan
to ensure that the loans be repaid.
Measures Employed by Cooperatives
Agustin (2000), found out in her study that majority of his respondent said
training decreases delinquency rate while the rest of the respondents who agreed that rate
went down due to trainings supported their answers with the following reasons: members
of the cooperative became aware of their duties and responsibilities as members and
became aware of their benefit from cooperative.
This implies that most members of both types of cooperative have understood the
advantage of paying their loans of maturity date.
Furthermore, the manager of LTVP-MPC stated that incase of non-repayment of
loans, a grace period is given to the borrowers to pay. The borrower will set the time he
will pay the loan if he has valid reason.
In addition, he stated that establishing a good working relationship with the lender
can go a long way toward establishing a good line of credit.( Agustin, 20002)
Collecting of Loans
Wadasen (2001), stated that repayment capacity of borrowers is the major basis in
the determination of the amount of loan granted. This represents the person’s ability to
use and manage credit wisely as measured by the stable reasonable amount of profit. It is
Causes of loan delinquency and control practices of La Trinidad Vegetable
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8
a test of economic feasibility of the loan be repaid without difficulty, it is generally
attained if an instrument is profitable.
Problems Encountered in the Collection of Loans
Kiwa-en (2007) noted that cooperative are faced with problems of delinquent
loans due to circumstances which if not properly managed will result in the tremendous
financial set-back and loss of confidence of members-borrowers in the cooperative
lending programs or services
Attitudes of Members Towards Loan Repayment
According to Dequit (2003), her findings shows that the respondents strongly
agreed to the attitude of paying all the obligations on time for them to be a member of
good standing and serve also a model to their other members. Prompt payment leads to a
good status of the cooperative, and for the cooperative to be able to lend money to the
rest of the members too. She said that majority of the members believed that they must be
reminded of their balances before the maturity date for them to prepare and avoid delayed
payments.
Loan Security
Van Horne (1989) stated that many firms obtain credit on an unsecured basis
either because they are new and unproven or because bankers do not highly regard the
firm’s ability to service dept. in order to make a loan, lenders require security that will
secure their risk of loss.
With security, lenders have two sources of loan payment: the cash flow ability of
the firm to service the debt and, if that sources fails for some reason, the collateral value
Causes of loan delinquency and control practices of La Trinidad Vegetable
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9
of the security will be used. Most lenders will not make a loan unless the firms have
sufficient expected cash flows to make proper servicing debt probable. To reduce their
risk further, lenders require security.
Mostly costly to administer than unsecured loans and that the incremental cost is
passed. On the borrower in the form of fees and higher interest costs that would otherwise
be the case.
Then, if unsecured credit is available somewhere at less total cost, one can be sure
that a borrower will go there to get it. Beyond a point in risk, however, all lenders in the
market will want some type of safeguard in addition to the general credit standing of the
company.
This safeguard can come in the form of security or a set of protective covenants
that afford the lender the ability to take corrective steps prior to maturity if the borrower’s
financial condition should deteriorate. A lender cannot demand security and expect to get
it unless the borrower has no other alternatives. The use of security is negotiated in
keeping with conditions in the overall market for loans.(Van Horne, 1989)
Requirement in Releasing Loans
The requirement submitted by the respondent when they applied loan are; real
state mortgage and fixed deposit certificate and checking account. There are some
reasons why the borrowers will submit requirement. This will serve as the security
measure for the cooperative and also it was a tradition practices of the cooperative (Kiwa-
en, 2007)
Causes of loan delinquency and control practices of La Trinidad Vegetable
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METHODOLOGY
Locale and Time of the Study
The study was conducted in the La Trinidad Vegetable Trading Post Multi-
Purpose Cooperative in La Trinidad, Benguet from December 2008 to January 2009.
Respondent of the Study
The respondent of the study were the delinquent borrowers and staff.
Data Gathering
Gathering data was done by giving survey questionnaire and interview with the
respondent. Secondary data were taken from the annual reports and activity reports.
Data Analysis
The information gathered was analyzed thoroughly with the use of frequency and
percentage.
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RESULTS AND DISCUSSION
Profile of the Respondent
Table 1 presents a brief information regarding the profile of the respondent of La
Trinidad Vegetable Trading Post Multi-Purpose Cooperative as to sex, civil status, age,
and educational attainment.
Sex. Majority ( 80 % ) of the respondent were female and twenty percent ( 20 %)
are male. This implies that majority of the members are females. The reason behind of
this indication was due to the trading business of vegetable requiring female.
Civil status. Majority ( 60 % ) were married,( 10 % ) are widower and ( 30 % ) are
single. The result implies that most of the member-borrowers and officers or staff are
married.
Age. Out of 50 respondents, (40% ) were with in 31-40 years old,( 30%) are with
in 41-50 years old, 20% in 51-60 years old and only( 10%) are with in the bracket of 21-
20 years old. The study shows that most of the respondents are in their middle ages.
Educational attainment. This present that (60% )of the respondent have gone to
high school,( 25% )have gone to college and (15%) finished elementary. This study
implies that the members-borrowers are literate.
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Type of Loan Mostly Availed of by the Member-Borrowers.
The types of loan offered by the La Trinidad Vegetable Trading Post Multi-
Purpose Cooperative are; Regular loan/ Agricultural loan, Emergency loan and special
loan.
From the Table 1 it is noted that Regular loan/ Agricultural loan was the mostly
availed of by the borrowers.
This indicated that most of the borrowers are farmers and the loan was being used
to finance the farm operation and for the continued operation of their farm business.
However, some borrowers mentioned that they also availed of emergency loan
usually for the payment of tuition fees of their children and other urgent needs and some
availed of the special loan purposely for starting capital of other business.
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Table 1.Profile of the respondent
PARTICULAR FREQUENCY %
Sex
37
Female
80
Male
9
20
TOTAL
46
100
Civil status
Single
14
30
Married
28
60
Widower
5
10
TOTAL
46
100
Age(Years)
20-30 years
5
10
31-40 years
18
40
41-50 years
14
30
51-60 years
9
20
TOTAL
46
100
Educational Attainment
Elementary
12
25
High school
28
60
College
6
15
TOTAL
46
100
Types of Loan mostly availed of by
the borrowers
Regular loan
32
70
Emergency loan
9
20
Special loan
5
10
TOTAL
46
100
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Factors Causing Loan Payment Delinquency
Table 2 Shows the perceived factors affecting loan payment delinquency by the
respondents. Thirty percent (30%) of the officers and staff and fifty percent (50%) of the
borrowers said that the unstable price of the vegetable was the most common factors that
contributed to loan delinquencies. The reason behind this was the uncontrolled supply of
vegetables coming from the different municipalities, and provinces that competed with
the local production. The respondents also mentioned that the competition of the poor
quality and packaging of the vegetable contributes a lot to a low price of the vegetable.
Twenty percent (20%) each of the officers and the member-borrowers said that
they usually used the loan for not intended purposes especially in time of emergency.
Thirty percent (30%) of the officers, staff ant ten percent (10%) of the borrowers
said that bankruptcy of their business was one of the factors affecting the delayed
payment of the borrowers.
On the other hand ten percent (10%) of the member-borrowers and another
(10 %) of the officers and staff mentioned that the bankruptcy of their business was due
to the natural calamities which was a big contribution affecting the payment on their loan.
This result indicates that the unstable price of the vegetable was the major factor
affecting the payment of the borrowers as perceived by both the officers and member-
borrowers. The difficulty in disposing the vegetable and mechanical damages resulting to
a lower price of the product thus less profit was realize due to physical damages resulted
to less profit of the farmers which contributed to their delinquency.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 2. Factors causing loan payment delinquency
FACTORS
OFFICERS AND
DELINQUENT
STAFF
BORROWERS
FREQ
%
FREQ
%
Used loans for other purpose
3
20
8
20
Unstable price of vegetable
4
30
25
50
Bankruptcy of livelihood or business
4
30
5
10
Natural calamities
2
10
4
10
Distance from home
2
10
4
10
TOTAL
15
100
46
100
Problem Encountered by the Member-borrowers
on Loan Payment
Table 3 shows that (50%) reported the problem and low price of vegetable and
bankruptcy of their business due to the rejected products was commonly encountered by
the borrowers. There were 40% of the respondent who said that they had not enough
money during the collection time
Ten percent (10%) indicated that natural calamities and unwanted accident
contributed to their delayed payment on their loan.
The respondent reason for not having enough money during the collection time
was their vegetables were not yet paid, the buyers did not pay the full amount they agreed
and also because of the low price.
Another reason mentioned by the respondent was due to the natural calamities on
themselves or in their children.
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Table 3. Problems encountered by the members-borrowers on loan payment
PROBLEMS
FREQUENCY
%
Low price of vegetable
23
50
No
money during the
18
40
collection
Natural Calamities
(Unwanted accident)
5
10
TOTAL
46
100%
Natural calamities was due to the typhoons, instances were; there stall was
destroyed by the strong typhoon and it in needs renovation. The said reason was usually
the time that they will use the loaned money.
Problems Encountered by Officers and Staff
In Releasing Loans
Table 4 indicated that the most common problems they encountered in granting
loans are the lack of document or insufficient documents that caused the delayed
approval and release of loans.
Another problem was that the improper usage of loaned money. Instances were; they
used the money in non-business purpose like; housing, tuition fee and payment for other
debt. This result to borrower’s delinquency.
It was also mentioned that there were instances where some documents were lost
or it were arranged thus, it is difficult to find them.
In controlling loan delinquency, the respondents mentioned that the negative
attitudes of the borrowers were the biggest problem they are having. They enumerated
some of the bad behaviors of the borrowers such as; borrowers fabricated stories just to
Causes of loan delinquency and control practices of La Trinidad Vegetable
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17
have a reason why they could not pay, some borrowers also would hide or run-away if
they see the collectors, they sent a another person to represent them if there are important
matters to be discussed and the intention of not visiting the cooperative.
Table 4. Problems encountered by the officers and staff in releasing and controlling loans
PROBLEMS ENCOUNTERED
FREQUENCY
%
Releasing Loan
Lack of document or insufficient document.
14
30
Improper use of loan or not intended
28
60
for the purpose applied
TOTAL
46
100
Controlling Loans
Negative attitudes of the borrowers.
28
60
Transfer residence of the members-borrowers.
9
20
Lack of commitment among officers.
9
20
TOTAL
46
100
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Practices of the LTVTP-MPC to Control Loan Delinquency
The respondents were asked to identify what remedial actions they perceived to
control loan delinquency. It is noted that notices and reminder letters to the delinquent is
one of the primary remedial action done by the cooperative.
The respondent also mentioned that letting the delinquent borrowers to do and sign
promissory note on when to pay helped the cooperative and the borrowers lessened the
unpaid loans.
Preventive Actions to Control Loan Delinquency as Perceived
by the Respondent and Officers and Staff
Preventive actions are shown in the Table 5. Most of the respondent agreed that
the preventive actions they must use are by informing the borrowers on their
responsibilities and duties such as their payment on time and strictly implement the
policies as to loan payment.
Table 5. Practices of the LTVP-MPC to control loan delinquency
PRACTICES
FREQUENCY
%
Send notices and collection letters to the
9
60
delinquent members.
Let the delinquent do promissory note
6
40
on when to pay and
Design a plan of payment with
delinquents and strictly implement it
TOTAL
15
100
Causes of loan delinquency and control practices of La Trinidad Vegetable
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On the other hand the cooperative speaks a lot of the screening of the applicants
thoroughly to ensure that borrowers would use the borrowed money to the intended
purpose. Project monitoring should be conduct regularly. The respondents said that by
sending the person in charged in loan releasing to conduct a seminar regarding the loan
policies would help lessen the occurrence of the loan delinquency.
Lastly the respondents also mentioned that loan forms must be properly filled-up
by the borrowers and this forms would be kept properly at the cooperative office. The
terms and conditions of loan should be well explained to the borrowers.
However some of the said preventive actions were not implemented sometimes. It
is difficult to collect from busy businessmen.
Table 6. Preventive actions to control loan delinquencies by the LTVTP-MPC officers
and staff
PREVENTIVE
FREQUENCY
%
Inform the borrowers on their responsibilities and duties
6
40
such as their payment on time
Maintain up-to-date and accurate records on the loans of
4
30
all borrowers.
Strictly implement the loan forms should be proper filled-
up by the borrowers and filed at the cooperative office.
The terms and conditions of the loan should be properly
2
10
explained to the borrowers
Conduct regular monitoring
3
20
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Measures Employed by the La Trinidad Vegetable
Trading Post Multi-purpose Cooperative
The La Trinidad Vegetable Trading Post multi-purpose Cooperative officers and
staff enumerated some measure employed by them to reduce loan delinquency. Table 7
shows that 40% of the respondent said they conduct seminars and meeting such as pre-
membership seminar and financial counseling so that they will have enough knowledge
on where to use and when to pay their loan on time. This finding shows that training may
decrease the loan delinquency.
Twenty percent (20%) mentioned that continuous education and training is
important since it helps members to be active and learn more knowledge on how to
handle money and used it for intended purpose. Thirty percent(30%) shows that personal
approach by the collector or officer can also help reducing the loan delinquency where in
they can personally converse and get the reasons for the delayed payment of their loan
and they cay discuss, suggest a remedies and solutions. Ten percent (10%) shows that the
members also need a reminder letter for them to be prepared on the due date.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 7. Measures employed by the La Trinidad Vegetable Trading Post Multi-purpose
Cooperative to reduce loan delinquency
MEASURES
OFFICERS AND STAFF
FREQUENCY
%
Conducting financial counseling and seminar
6
40
Reminding their balances before due date.
2
10
Personal approach by the collector or officer
4
30
Continues education
3
20
TOTAL
15
100
Orientation on Terms and Conditions of Loan
Table 8 shows that eighty percent (80%) of the respondent, said that the staff
explain the terms and conditions of the loan before releasing the money. There were 20%
who said that the staff do not explain the terms and conditions of the loan specially
during busy hours.
Table 8. Orientation of terms and conditions of loan
RESPONSE
FRREQUENCY
%
Explain
37
80
Do not explain
9
20
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Mode of Collecting the Loan Payment
Table 9 presents the mode of collecting loan payments by the cooperative. Fifty
percent of the respondents said that they personally pay it to the cooperative, 10% said
that they give their payment to a representative, while 40% said they pay through the
collector. However some of the respondent said that they waited for the collector during
the scheduled collection time because of the distance and they don’t have enough time to
visit the cooperative.
Those who personally pay to the cooperative mentioned that they prefer handling
the money to the treasurer because, there were instances that when they send a
representative to pay for them they just find out that they had a balance or unpaid loan.
Those who paid their loans through a representative have no time to visit the cooperative
so they just entrust their payments to someone they know who is going to the
cooperative.
Table 9. Mode of collecting loan payment by the La Trinidad Vegetable Trading Post
Multi-purpose Cooperative
MODE OF COLLECTION
FREQUENCY
%
They personally pay it to the
23
50
cooperative
They give to someone or
9
10
representative
Through the collector
18
40
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Suggested solutions by the Officers and
Staff to Reduce Loan Delinquency
Table10 presents the solutions suggested by the officers and staff of the LTVTP-
MPC to reduce loan delinquencies. Fifty percent (50%) mentioned that by strict
implementation of policies, rules and regulation regarding loans is the most preventive
way to avoid loan delinquencies.
Thirty percent (30%) of the officers and staff identified that possible solution to
reduce loan payment delinquencies is by re-structuring the loan. Ten percent(10%) of the
officers and staff also said that other possible solution is by sending demand letter to the
borrowers.
Ten percent (10%) observed that sending officers or collector to the borrowers
gives a capacity to the members to pay especially those staying in far places contributed
to lessening loan delinquency.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Table 10. Suggested solutions of the La Trinidad Vegetable Trading Post Multi-purpose
Cooperative
SOLUTIONS FREQUENCY %
Re- structuring of the loan
4
30
Strict implementation of policies
8
50
Sending demand letter
2
10
Sending collector or officer to collect
1
10
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SUMMARY, CONCLUSIONS AND RECOMMMENDATIONS
Summary
This study was conducted to look into the factors affecting loan delinquencies of
La Trinidad Trading post vegetable Multi-purpose Cooperative in La Trinidad Benguet
and the control practices of the cooperative to reduce loan delinquency.
The study was conducted to identify the factors affecting loan delinquencies,
problems encountered by the member-borrowers on loan payment, problem of LTVTP-
MPC in granting loans, measures employed by the coop to reduce loan delinquencies,
preventive and remedial action to control the loan delinquency.
A prepared survey questionnaire was used to collect data for the study. The data were
tabulated and analyzed by using descriptive statistics methods such as frequency and
percentage.
This was conducted at La Trinidad Vegetable Trading Post Multi-purpose
Cooperative with 15 officers and staff and 46 member-borrowers who has been
delinquent of the coop as the respondent.
Findings showed that majority of the respondent were female, married with ages
of ranging 31 to 50 years old.
The study shows that the Agricultural loan/Regular loan has the highest percentage of
delinquencies. The reason is because of the risk in agricultural production, price
fluctuation of vegetable and the weather condition.
It was determined by the study that most of the problems encountered by the
member-borrower on loan payment were; no money during collection, less income for
the day because of low price of vegetables.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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On the other hand, the problems encountered by the cooperative officers and staff
to member-borrowers were; improper using of loans, lack of project monitoring and
insufficient documents.
Solutions employed by the cooperative to control loan delinquency were; consider
the character of member-borrower, sending reminder letter, financial counseling,
continues education regarding their duties and responsibilities and impose strict
collection. The sources of funds for loan payment were commonly from their sales
coming from their farms and also the borrowed money from others
Causes of loan delinquency and control practices of La Trinidad Vegetable
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Conclusion
Based on the findings, the following conclusions are drowned.
1. The borrowers mostly availed of the Agricultural loan.
The reason of this was traders are also a farmer. They mentioned that they
had also a farm but they had a personnel or workers who managed and operate it but they
give a financial support.
2. A big factor that contributes to become a loan delinquent member was not
enough money during collection time and the unstable price of vegetable.
This finding was due to some circumstances, according to them they usually
experienced this during the time that they had received or experience the “bouncing
checks” especially to those new buyers that may lead to the bankruptcy of their business.
3. The preventive actions perceived by the cooperative to control loan
delinquency
Are as follows;
a. Inform their borrowers to their duties and responsibilities such as
paying their loan on time.
b. Implement strict loan policy.
c. Give sanctions or penalty to the late payee.
4. Other problem encountered by the cooperative was the lack of commitment
among the officers and the transferred residence of the borrowers.
According to the respondent, some of the officers and staff do not attend
some of the regular meetings and activities of the cooperative. They only visit the
cooperative when they wanted something.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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5. The remedial actions perceived by the officers and staff was to send
reminder letters in advance or a week before the due date for them to prepared their
payment or earlier.
Recommendations
For Members-borrowers
1. Borrowers should practice the habit of paying their loan on time.
2. Schedule a time to pay and set aside money for paying loans.
3. The availed loan should be used in proper purpose and not for luxury or
desires.
4. Members should know their duties and responsibilities once they entered in the
cooperative.
For cooperative officers and staff
1. Loan policies are to be applied and implement strictly on collection of loan.
2. To control loan delinquency the preventive and remedial actions should be
practiced.
3. Continuous counseling regarding loan payment should be provided to member-
borrowers.
4. The officer should be regularly reminding the borrowers before their due date.
5. The coop should come up with an activities or programs that aim to improve
negative way of paying the loan they voluntarily borrowed.
Causes of loan delinquency and control practices of La Trinidad Vegetable
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LITERATURE CITED
AGUSTIN, L.M. 2000. Perceived effects of trainings on the performance of cooperatives
in Kibungan Benguet. BS Thesis. Benguet State University, LaTrinidad
Benguet. Pp 5-6.
AGUSTIN, L.M 2000. Perceived effects of trainings on the performance of cooperatives
in Kibungan Benguet. BS Thesis. Benguet State University, LaTrinidad Benguet.
Pp 5-6.
BIASE, L.A. 1979. Repayment of deficiencies in agricultural loans in Buguias, Benguet.
BS Thesis. Benguet State University, La Trinidad Benguet. P4.
DEQUIT, F.J. 2003. Attitudes of members of selected cooperative in La Trinidad
Benguet towards borrowing and repaying of Loan. BS Thesis. Benguet State
University, La Trinidad Benguet P.18.
DICLAS, J.A. 2005. Management Problems of cooperatives in Baguio City: A
Thesis.Easter College, Inc. Baguio City. Pp. 1-10.
KIWA-EN, D.G.2007. Factors affecting loan payment delinquency of La Trinidad,
Benguet Trading Post Multi Purpose Cooperative in La Trinidad Benguet. BS
Thesis. Benguet State University, La Trinidad Benguet. Pp. 9-12
POZEL, M.C. 1981. Farmers Cooperatives. United States of America Agriculture
Cooperatives Service. P5.
SUPANGA, M.P. 2002. Implementation of loan policies of Philex Employees Credit
Cooperatives in PHILEX, Pacdal, Tuba, Benguet. A Baby thesis. Easter College,
Inc. Baguio City. P. 11.
TAGANAS, P.1979. Repayment deficiencies of agricultural loans in Bontoc, Mountain
Province BS Thesis. Benguet State University La Trinidad Benguet. P.43
VAN HORNE, J.1989. Financial Management and Policy. 8’th ed. Pretice Hall,
Englewood Cliffs, New Jersey. Pp. 489-507.
WADASEN, R.P 2001. Financial management practice of the St. Jude Community MPC
in Buguias, Benguet. An assessment. MS Thesis, Benguet State University, La
Trinidad Benguet. Pp29.
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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APPENDIX A
Letter to the Respondent
College of Agriculture
DEPARTMENT OF AGRICULTURAL ECONOMICS
AND AGRIBUSINESS MANAGEMENT
Benguet State University
La Trinidad, Benguet
January 2009
Dear Respondent,
The undersigned is a fourth year student of Agribusiness in Benguet State University.
Conducting a research entitled “FACTORS AFFECTING LOAN DELINQUENCY
AND CONTROL PRACTICES OF LA TRINIDAD TRADING POST MULTI-
PURPOSE COOPERATIVE”.
In this regard, may I humbly request a portion of your time to answer the attached
questionnaire? Your kindness assistance will enable me to complete the requirement in
due time. Rest assured that all information you provide will be treated with utmost
confidentiality.
Your favor and consideration with regards to this endeavor is fully appreciated.
Respectfully yours,
MELITA D. BANGSOYAO
Researcher
Noted by:
LUKE E. CUANGEY
Adviser
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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APPENDIX B
Letter to the Manager
College of Agriculture
DEPARMENT OF AGRIBUSINESS ECONOMICS
AND AGRIBUSINESS MANAGEMENT
Benguet State University
La Trinidad, Benguet
January 2009
Mr. Tanny Atayoc
Manager
La Trinidad Vegetable Trading Post Multi-Purpose Cooperative
Km5. La Trinidad, Benguet
Sir:
Warm Greetings!!!
I, Melita D. Bangsoyao, a student of Benguet State University taking up Bachelor of
Science in Agribusiness major in Cooperative Management. I am presently conducting a
research titled “FACTORS AFFECTING LOAN DELINQUENCY AND CONTROL
PRACTICES OF LA TRINIDAD VEGETABLE TRADING POST MULTI-PURPOSE
COOOPERATIVE” as a requirement for the degree.
In connection, may I request permission to conduct my study and float my questionnaires
to your members?
Thank you very much for your favorable action regarding this request. Your favorable
action will be highly appreciated.
Sincerely yours,
MELITA D. BANGSOYAO
Researcher
Noted:
LUKE E. CUANGEY
Adviser
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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APPENDIX C
Survey Questionnaire for Cooperative Officers and staff
(For Cooperative-officers)
I. Information on the Cooperatives
Name of the Cooperative:___________________________________________________
Address: ________________________________________________________________
Number of Years in Operation:_______________________________________________
Types of loan offered: _____________________________________________________
Type of loan mostly availed of the borrowers: __________________________________
Do you have written policies?
Yes_____
No_____
If available, have you been strictly implementing? Yes_____
No_____
Do you have functional credit committee?
Yes_____
No_____
Who are staff involved in loans operation and many of them?
___________Manager
___________Loan clerk
___________Loan officer
___________Collector
___________others, please specify: ____________________________________
II. Practices on Loan Delinquency Control
What are your loan requirements?
___________Share capital
___________Savings deposit
___________Business permit
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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____________Co-maker
a) How many co-makers do you require ___________________________
b) What are the qualifications ___________________________________
____________ Collateral
a) What kind of collateral do you accept ___________________________
Do you conduct credit investigation?
Yes_____
No_____
If yes, where do you usually conduct it?
____________ To other cooperatives in the place
____________To other private lending firms operating in the place
____________Others, please specify____________________________________
Do you orient your borrowers on the term and conditions of their loans?
Yes____________
No____________
Do you visit the project where the borrowers used their loan?
Yes____________
No____________
What actions do you undertake if you find that the borrowers did not used their loan for
the intended purpose?
____________ Force to pay or return the loan in the cooperative.
____________ A penalty is imposed.
____________ Disqualify him/her to avail of loans again.
____________ Subject the borrower to strict monitoring.
____________ Others, please specify
How do you collect loans?
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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____________The borrowers personally pay it to the cooperative.
____________They just send it to someone who goes to the cooperative.
____________Through the collector.
Do you remind the borrowers regarding their due date?
Yes_____ No_____
If yes, how do you remind them?
___________By giving notice/collection letters.
___________By sending staff.
___________By restructuring the loan.
___________By collecting from their co-makers.
____________Others, please specify____________________________________
If the borrowers cannot really pay after exhausting all remedies, do you subject them to
legal actions?
Yes______
No______
III. Perceived Preventive Actions to control Loan Delinquency.
Put a check mark on the actions you perceived to control the occurrence of loan
delinquency in your cooperative.
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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PREVENTIVE ACTIONS
____________Inform the borrowers on their responsibilities and duties such as their
payments on time.
____________ Maintain up-to-date and accurate records on the loans of all borrowers.
____________Strictly implement the loan forms should be properly filled-up by the
borrowers and filed at the cooperative office.
____________The terms and conditions of the loan should be properly explained to the
borrowers.
____________ Give reminders letters.
_____________ Insure that the borrowers comply with all loan requirements.
____________ Screen the loan applicants thoroughly as to their capacity, character and
collaterals.
____________ Insure that the loan of the borrowers is used in its purpose.
____________ Inform co-makers and spouse of the borrowers on their duties and
responsibilities.
____________ Submit reports on loans regularly to the Board of Directors.
____________ Provide satisfactory service to the borrowers.
____________ Employ collectors whose main job is to collect payments from the
borrowers.
____________ Conduct regular monitoring on the project of the borrowers.
____________ Conduct seminar on loans collection for the person involved in it.
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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IV. Perceived Remedial Actions to collect Loan Delinquency
Put a check mark on the actions perceived to collect delinquent loans.
REMEDIAL ACTIONS
________________________________________________________________________
___________ Send notices and collection letters to the delinquent, co-makers and spouse.
___________ Ask the help of other officers in the collections.
___________ let the delinquents to do promissory note on when to pay.
___________ Design a plan of payment with delinquent and strictly implement it.
___________ Make collection to the Delinquent’s co-maker and spouse.
___________ Provide amnesty on fines.
V. What problems have you encountered with regards to your loan delinquency control?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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APPENDIX C
Survey Questionnaire for Member-borrowers
(For Members-Borrowers)
I. GEOGRAPHIC INFORMATION
1. Name of cooperative_______________________________________________
2. Address of Cooperative_____________________________________________
II. GENERAL INFORMATION ON THE RESPONDENT
3. Name___________________________________________________________
4. Age_______ 5. Sex_______ Male_______ Female 6. Civil status_______
7. Highest educational attainment
____________ Elementary ____________ High School
____________ College, please specify course_____________________________
1. Position in the cooperative
____________ Officer, specify________________________________________
____________ Manager, specify_______________________________________
III. REPAYMENT OF LOAN
1. What was the latest loan you availed in the cooperative?
________________________________________________________________________
Causes of loan delinquency and control practices of La Trinidad Vegetable
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2. What was the purpose of the loan?
________________________________________________________________________
Type of loan
Amount
Term
Emergency loan
_________________
________________
Agricultural loan
_________________
________________
Others, specify
_________________
________________
4. How did you pay your loan?
_________________________ Through collector from cooperative
_________________________ personally went to the cooperative
_________________________ sent payment through representative
_________________________ Others, specify__________________________________
5. Methods of payment (please check)
____________ Full payment
____________ Installment
____________ Others, specify___________________________________
1. If installment, what were the terms of payment?
____________ Weekly
___________ Installment
____________ Monthly
___________ Annually
2. Describe the maturity period of your loan?
____________ Short
____________ Just enough
____________ Long
____________ Others, specify___________
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
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V. MEASURES EMPLOYED BY THE COOPERATIVE TO REDUCE LOAN
DELINQUENCY
6. Methods of collecting payments
___________ Full payment
___________ Installment
___________ Others, specify____________________________________
3. If installment, what are the terms of payment employed?
____________ Weekly
___________ Quarterly
others, specify______
____________ Monthly
___________ Annually
Causes of loan delinquency and control practices of La Trinidad Vegetable
Trading Post Multipurpose Cooperative /Melita D. Bangsoyao. 2010
Document Outline
- Causes of loan delinquency andcontrol practices of La Trinidad Vegetable Trading Post Multipurpose Cooperative
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- Background of the Study
- Statement of the Problem
- Objectives of the Study
- Importance of the Study
- Scope and Limitation of the Study
- REVIEW OF LITERATURE
- Loan Delinquency
- Factors Affecting Loan Repayment Delinquencies
- Causes of Loan Delinquency
- Practices to Control Loan Delinquency
- Measures Employed by Cooperatives
- Collecting of Loans
- Problems Encountered in the Collection of Loans
- Attitudes of Members Towards Loan Repayment
- Loan Security
- Requirement in Releasing Loans
- METHODOLOGY
- RESULTS AND DISCUSSION
- Profile of the Respondent
- Type of Loan Mostly Availed of by the Member-Borrowers.
- Factors Causing Loan Payment Delinquency
- Problem Encountered by the Member-borrowerson Loan Payment
- Problems Encountered by Officers and StaffIn Releasing Loans
- Practices of the LTVTP-MPC to Control Loan Delinquency
- Preventive Actions to Control Loan Delinquency as Perceivedby the Respondent and Officers and Staff
- Measures Employed by the La Trinidad VegetableTrading Post Multi-purpose Cooperative
- Orientation on Terms and Conditions of Loan
- Mode of Collecting the Loan Payment
- Suggested solutions by the Officers andStaff to Reduce Loan Delinquency
- SUMMARY, CONCLUSIONS AND RECOMMMENDATIONS
- Summary
- Conclusion
- Recommendations
- LITERATURE CITED
- APPENDIX