BIBLIOGRAPHY KIMBERLY G. TODYOG. MARCH 2006....
BIBLIOGRAPHY
KIMBERLY G. TODYOG. MARCH 2006. Credit Operation of the La Trinidad
Vegetable Trading Post Multipurpose Cooperative. enguet State University, La Trinidad,
Benguet.
Adviser: Clifton D. Llanes, BS.
ABSTRACT
This study was conducted to determine/know the following: profile of the
borrowers, purpose of loan acquired, credit policies, factors affecting loan delinquency,
and the problems encountered by the loan borrowers. This was conducted at La Trinidad
Vegetable Trading Post Multipurpose Cooperative with 30 member-borrowers of
LTVPTMPC as respondents in January 2006.
The mean age of the respondents was 36 years old, majority were female, all of
them had formal education and most of them were college graduate, majority were
engaged in vegetable trading with very few farmers.
Members availed of productive loan for vegetable production and for vegetable
trading business. Emergency loans were used mostly for education purpose. It is the
policy of the cooperative to loan only to those who have paid their membership fee, theire
minimum share capital, attended and completed the PMES, and have been a member for
at least two months. The maximum amount to be borrowed is two times one’s paid-up
share capital. The cause’s delinquencies were: borrowers used their money for other
purposes, bankruptcy due to natural calamities, and loans were not used for the intended
purpose.
TABLE OF CONTENTS
Page
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Abstract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Importance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Scope and Delimitation of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
REVIEW OF LITERATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Definition of Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Legal Basis of Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Purpose of Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Types of Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Causes of Failure of Credit Cooperatives. . . . . . . . . . . . . . . . . . . . . . . .
6
Causes of Loan Delinquency
7
Loan Security
8
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
ii
Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Data Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .
11
RESULTS AND DISCUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
General Information About the Respondents . . . . . . . . . . . . . . . . . . . . .
12
Purpose of Loaning . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .
14
Requirements Submitted by the Borrowers
When They Applied for Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Duration of Loan Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Perceptions of Borrowers on the
Release of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
How the Loan was Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Sufficiency of Amount Borrowed for
Purpose Indicated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Loan Repayments by Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Loan Repayment Delinquency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Causes of Loan Repayment Delinquency . . . . . . . . . . . . . . . . . . . . . . .
20
Payments of Interest by the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . .
21
Problems Encountered by Borrowers
in Securing Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
SUMMARY, CONCLUSIONS AND
RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Recommendations
25
iii
LITERATURE CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Appendix A. Letter to the Respondents . . . . . . . . . . . . . . . . . . . . . . . .
27
Appendix B. Survey Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
EXHIBIT 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
iv
INTRODUCTION
Rationale of the Study
The La Trinidad Vegetable Trading Post Multipurpose Cooperative (LTVTMPC)
was registered on September 9, 1992 with the Cooperative Development Authority
(CDA). It was originally named as La Trinidad Vegetable Trading Post Allied Services
Cooperative (LTVTPASC) and later was amended as it is named today, upon insistence
of CDA in accordance with the new cooperative guidelines.
Records showed that the cooperative started its operation with initial paid up
share capital of Thirteen thousand Five Hundred Pesos (P13,500.00) only. This was
contributed by the 15 members at P900 each. In the course of time, more people joined
the cooperative as members. They were private and government employees, businessmen
and women, vegetable traders and producers. As of February 28, 2003, there were 897
members and the paid-up share capital and total asset amounted to P11,240,036.80 and
P36,083,226.69, respectively. They owned a four-storey building located at Wangal, La
Trinidad, Benguet.
The foregoing remarkable growth of the cooperative in ten years speaks well of
the loyalty of the members, the strong determination and commitment of the Board of
Directors, committee members and management staff who had been serving, the
cooperative as volunteers in the beginning years. The cooperative had been providing
loans to its members which have helped them in their personal businesses. It is on this
basis that this study was conducted to evaluate the credit operation of the cooperative in
order to find out their good practices that can be emulated by other cooperatives.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
2
Statement of the Problem
The following questions set the focus of the study:
1. What is the profile of the borrowers?
2. What are the purposes of the loan acquired by the borrowers?
3. What are the credit policies of the cooperative?
4. What are the factors affecting loan delinquency of loan barrowers?
5. What are the problems encountered by the borrower?
Objectives of the Study
This study attempted to describe the Credit Operation of the La Trinidad
Vegetable Trading Post Multi Purpose Cooperative and determine the profile of the
borrowers.
1. Determine the profile of the borrowers.
2. To find out the purpose of loan acquired.
3. To know the credit policies of the cooperative.
4. Find out the factors affecting loan delinquency of loan barrowers.
5. To find out the problems encountered by the loan borrowers.
Importance of the Study
The results of this study would guide the board of directors and other officers in
making plans for the improvement of the cooperative operations. Furthermore, it could
also serve as a source of information for further research on other related studies.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
3
Scope and Delimitation of the Study
This study focused on the evaluation of the credit operation of La Trinidad
Trading Post Multipurpose Cooperative to find out if their loan policies are being
followed in their actual lending and collection as perceived by the members.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
4
REVIEW OF LITERATURE
Definition of Cooperative
According to Onagan (1997), a cooperative is an association of persons who join
together to carry an economic activity for their mutual benefit. A cooperative differ from
a corporation in the sense that sharing of benefits in a cooperative is based on the
principle of equity unlike the corporation that is based on shares of stocks or the amount
of capital invested in the business. Membership of the cooperative is open and voluntary,
meaning that anyone who satisfies certain non-decimator conditions may join the
cooperative. Each member of the cooperative is entitled to only one vote.
Aquino (1991) stated that a cooperative is a duly registered association of
persons, with a common bond of interest, who have voluntarily joined together to achieve
a lawful common social and economic end, making equitable contributions to the capital
required and accepting a fair share of the risk and benefits of the undertaking in
accordance with the universally accepted cooperative principles.
Legal Basis of Cooperative
Republic Act Number 6938, Article 2, otherwise known as the Cooperative Code
of the Philippines, declared that it is a state policy to foster the creation and growth of
cooperatives as a practical vehicle for promoting self-reliance and harnessing people’s
power toward the attainment of economic development and social justice. The state shall
encourage sector to undertake actual formation and organization of cooperatives and shall
create atmosphere that is conducive to the growth and development of their cooperative.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
5
Toward this end, the government and all its branches, subdivision, instrumentalities and
agencies shall ensure the provision of technical guidance, financial assistance and other
services to enable the said cooperatives to develop into viable and responsive economic
enterprises that thereby brings a strong cooperative movement that is free from any
condition that might infringe upon autonomy or organizational integrity of the
cooperatives.
Purpose of Cooperatives
Article 6 of Republic act 6938 states that a cooperative may be organized and
registered by at least 15 members for any of the following purposes:
a. To encourage thrift and savings mobilization among members.
b. To encourage among members systematic production and marketing.
c. To generate funds and extend credit to members for productive and provident
purposes.
d. To promote goods and services and other requirements to the members.
e. To acquire lands and provide housing benefits for the members.
f. To ensure against losses of the members.
g. To promote and advance the economic, social, educational status of members.
h. To establish, own, and lease operate cooperative banks, cooperative wholesale and
credit complexes, insurance and agricultural and industrial processing enterprise and
public markets.
i. To coordinate and facilitate the activities of the cooperatives.
j. To undertake any and all other activities for the effective and efficient implementation
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
6
of the provision of the code.
Types of Cooperative
Nolledo (1976) mentioned different types of cooperatives, credit cooperative,
consumer cooperative, marketing cooperative, producers cooperative, and service
cooperative. Majority of the cooperatives registered with the CDA are multipurpose
cooperatives. Being a multipurpose cooperative, they offer more than one type of service
depending on the need of their members. The credit union is a type of cooperative that
pool the money of the members then give them as loans to their members.
Causes of Failure of Credit Cooperatives
According to Taganas (1979), the failure cooperatives are often due to the failure
of member-borrowers to pay their loan or the delinquency of members in paying their
loans. The failure of farmers to pay their loans on time according to Taganas was because
the money was diverted to non-farm activities such as food, house repair, education and
recreation. Some loans were used to settle other accounts from suppliers of farm inputs.
Cawaon (1982) stated that the practice of requiring loan collateral for loaning is
the protection of the investors for losses due to the failure of the business or bad faith of
barrowers. Credit cooperatives are faced with viability problem caused mainly by the
delinquency on loan receivables. Loan capacity is impaired by such delinquency so that
other possible beneficiaries lose opportunity to borrow and use loans as complements for
sustaining capital. This is especially true in community based cooperative. Trends show
high seasonal peaks of loan application. Sometimes resulting in suspension of loan
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
7
releases definitely displease members a consequent of these delays or suspension of loan
releases.
Singh (1977) stated that repayment capacity is a test of economic feasibility. It is
generally assumed that if an investment is profitable, the loan can be paid without any
difficulty. The poor payment of a farmer may due to either a one or more of the
following:
1. Small size of the farm business which results to small income.
2. Low productivity due to poor land.
3. Low price of farm products, distress sales and low infrastructure.
4. High production cost.
5. Diversion of loan for unproductive purposes.
6. High cost of living.
As stated on the handbook on Agrarian Reform and Taxation (1975), one of the
main problem of the cooperative development is the lack of competent staff at various
level of qualification. This shortage of adequately trained staff is especially acute in the
field of management; hence, some kind of emergency action is acquired in many cases of
cooperative in order that the members apply their role as efficient instrument of social
and economic development.
Causes of Loan Delinquency
The causes of difficulty in loan payment by farmers as identified by Biase (1979)
were as follows: money of the farmers was spent for other purposes, low production, crop
damaged due to natural calamities, wrong timing of collection, low market price, high
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
8
cost of production, and lack of transportation facilities. Biase further mentioned that the
personal characteristics of the farmer affect loan repayment delinquency. These personal
characteristics included household size, educational attainment, and farming experience.
Ganawed (1997) also identified natural calamities, low market price, high cost of
production, and lack of transportation facilities.
Loan Security
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 debt. In
order to make a loan, lenders require security that will reduce 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 source fails for some reason, the collateral value of the
security. Most lenders will not make a loan unless the firm has sufficient expected cash
flows to make proper servicing of debt probable. To reduce their risk further, lenders
require security. Secured lending arrangements are mostly costly to administer than
unsecured loans and that the incremental cost is passed on to the borrower in the form of
fees and higher interest costs than 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
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
9
borrower has no other alternatives. The use of security is negotiated in keeping with
conditions in the overall market for loans ( Van Horne, 1989).
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
10
METHODOLOGY
Locale and Time of the Study
This study was conducted at La Trinidad Vegetable Trading Post Multipurpose
Cooperative from January to February 2006.
Respondents of the Study
The respondents of this study were the Manager and Bookkeeper of La Trinidad
Vegetable Trading Post Multipurpose Cooperative and 30 member barrowers.
Data Collection
An interview guide was used to obtain data from the manager and officers of the
cooperative. For the member-borrowers, a prepared questionnaire was floated to them.
Points that need to be clarified were asked personally by the researcher from the
respondents. Existing written credit policies as well as loan documents were the other
sources of information on operations procedure, type of loan applied for; and payments of
loans.
Data Collected
In order to answer the objectives, the following data were collected: purpose of
loan, credit policies of the coop, factors affecting loan delinquency of loan borrowers.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
11
Data Analysis
The data gathered was analyzed and interpreted according to the objectives of the
study. Statistical tools such as frequency counts, means, and percentage were used in the
analysis.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
12
RESULTS AND DISCUSSION
General Information About the
Respondents
Table 1 presents the age, sex, civil status, educational attainment and occupation
of the respondents.
Sex. Among the 30 respondents, 73.33% were female and 26.67% were male.
According to many of the respondents, females are greater in number than the males in
the cooperative membership because the female had enough time to attend all the
cooperative activities. The males on the other hand, were always busy on their business
transaction on the field especially for farmers.
Age. As shown in the table, the respondents’ mean age was 36 years old. Most
36.67% belonged to the age bracket of 36 -45 years old. Some 23.33% belonged to age
bracket of 25 – 35 years old, 30% belonged to 46 -55 years old and 10% belonged to 55 -
60 years old.
Civil status. Table 1 shows that most (63.33%) of the respondents were married,
26.67% of the respondents were single, and 10% were respectively widowed.
Educational attainment. On the educational attained, almost all (100%) of the
respondents had gone to school. Table 1 shows that most of the respondents (46.67%)
had finished college education; 36.67% high school, 16.67% were elementary graduates,
and 6.67% were vocational graduates.
Occupation. Most (40%) of the respondents were vendors; 33.33%, vegetable
dealers; 13.33%, vegetable traders, 10%, were farmers, and 3.33%, retailer.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
13
Table 1. Profile of the respondents
PARTICULARS
FREQUENCY
PERCENTAGE
a. Sex
Female
22
73.33
Male
8
26.67
Total
30
100
b. Age
25 – 35
7
23.33
36 – 45
11
36.67
46 – 55
9
30
56 - 60
3
10
Total
30
100
c. Civil Status
Single
8
26.67
Married
19
63.33
Widowed
3
10
Total
30
100
d. Educational Attainment
Elementary
3
10
High School
10
33.33
College
14
46.67
Vocational Graduate
2
6.67
Total
30
100
e. Occupation
Dealer
10
33.33
Farmer
3
10
Vendor
12
40
Retailer
1
3.33
Trader
4
13.33
Total
30
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
14
Purpose of Loaning
Table 2 presents the two types of loan according to purpose:
Productive loan. As presented, most of the individual borrowers (60%) obtained
loans for vegetable production and (40%) for business capital.
Emergency loan. The table shows that educational loan was the major purpose of
most individual borrowers with a percentage of 66.67% followed by hospitalization and
medical with percentage of 26.67% and dry goods, sari-sari store, both with 3.33%.
Table 2. Loaning purpose of individual borrowers
PURPOSES
FREQUENCY
PERCENTAGE
a. Productive Loan
Vegetable production
18
60
Business capital (Trade)
12
40
b. Emergency Loan
Hospitalization/Medical
8
26.67
Education
20
66.67
Dry Goods (wagwagan)
1
3.33
Sari-sari store
1
3.33
Requirements Submitted by the Borrowers
When They Applied for Loan
The requirements submitted by the respondents when they applied for loan real
estate mortgage and chattel mortgage as mentioned by 33.33% and 30%, respectively.
Nine respondents or 30% said they submitted a promissory note while one respondent
each submitted a fixed deposit certificate, and a checking account (Table 3).
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
15
Table 4 presents the reasons why they submitted all these requirements. As
mentioned by 53.33% of the respondents, these requirements served as security measure
for the cooperative while 14 or 46.67% said that it is the traditional practice of the
cooperative. This finding implies that at least the member-borrowers were aware of the
credit policies of the cooperative.
Table 3. Requirements submitted by the members when they applied for loan and the
reasons for the requirements
REQUIREMENTS
FREQUENCY
PERCENTAGE
Real estate mortgage
10
33.33
Chattel mortgage
9
30
Promissory note
9
30
Fixed deposit
1
3.33
Checking account
1
3.33
Total
30
100
REASONS
Security measure for the cooperative
16
53.33
Traditional practice in lending operation
14
46.67
Total
30
100
Duration of Loan Processing
Table 4 presents the duration of loan processing by the loan borrowers. It shows
that most 93.33% of the respondents processed their loan from three to seven days,
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
16
3.33% of the respondents processed their loans for two to three weeks, and 3.33% of loan
borrowers processed their loans for four weeks and above. This means that the borrowers
usually get their loan less than a week after filing. The duration of processing also
depends on the type of loan and the requirements to be attached to the application form.
Table 4. Duration of loan processing by loan borrowers
DURATION
FREQUENCY
PERCENTAGE
1 week and below
28
93.33
2 – 3 weeks
1
3.33
4 weeks and above
1
3.33
Total
30
100
Perceptions of Borrowers on the Release of Loans
Table 5 presents that most response of the borrowers regarding the immediate
release of approved loans. The borrowers were asked if approved loans were released
immediately, almost all (93.33%) the respondents had a positive response. This implies
that almost all the borrowers received their loans upon approval. However, there were 2
who said that their approved loans were not immediately released because the credit
committee did not meet first before the approval of the loan.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
17
Table 5 . Reponses of borrowers if approved loans are immediately release
RESPONSE
FREQUENCY
PERCENTAGE
Immediately released
28
93.33
Not immediately released
2
6.67
Total
30
100
Reason for not releasing immediately
Credit committee has to meet first
2
100
How the Loan was Released
The borrowers were asked if the cooperative released their loans either in full
cash or installment. As found in Table 6, all the respondents received their loan in full
cash after it was approved. This finding implies that the cooperative usually release loans
of their members in full cash. There may be a rare case when the loan was released on
installment but this is not the usual practice of the cooperative.
Table 6. How approved loan were released
METHODS
FREQUENCY
PERCENTAGE
Full cash
30
100
Installment
-
-
TOTAL
30
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
18
Sufficiency of Amount Borrowed
for Purpose Indicated
Table 7 presents the responses of the borrowers if the amount borrowed was
enough for the purpose stated in the loan form. The result shows that 70% responded that
the amount loaned was enough for the purpose but 30% said that the loan was not enough
for their purpose. The amount borrowed may not be enough because the capital
requirement for their business was bigger than what they could borrow from the
cooperative. However, the cooperative cannot loan the whole amount they needed
because it was not in accordance with their policy.
Table 7. Opinion on the sufficiency of amount borrowed
RESPONSE
FREQUENCY PERCENTAGE
Sufficient
21
70
Not sufficient
9
30
TOTAL
30
100
Loan Repayment by Borrowers
Table 8 presents that the borrowers paid their loans either through the loan
collector or personally go to the office of the cooperative and pay there. Twenty five or
83.33% paid to the loan collector and five or 16.67% paid their loan at the office of the
cooperative. This implies that majority of the member-borrowers paid their loans to the
collector. The table further shows that 20% of the borrowers paid their loan in full cash
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
19
upon maturity, while 80% paid their loans on installment. This finding implies that
majority of the borrowers pay their loan on installment.
Terms of installment payment. Of the 24 respondents who paid on installment,
43.33% repaid their loans weekly, 16.67% repaid their loans monthly, and 20% repaid
their loans quarterly.
Table 8. Practices of respondents in paying their loans
PARTICULAR
FREQUENCY PERCENTAGE
a. To whom payments were given
Through the collector
25
83.33
Pay to the cashier at the office
5
16.67
Total
30
100
b. Mode of payment
Lump sum payment
6
20
Installment
24
80
Total
30
100
c. Installment interval
Weekly
13
43.33
Monthly
5
16.67
Quarterly
6
20.00
Total
24
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
20
Loan Repayment Delinquency
Table 10 presents the responses of the respondents as to whether or not they had
been delinquent in paying their loans. According to 11 respondents or 36.67% they had
been delinquent in paying their loans while 63.33% said they have not been delinquent.
This finding implies that the incidence of delinquent borrowers in the cooperative was
high as evidenced by the percentage of respondents who have been delinquent.
Table 10. Responses of borrower-respondents if they had been delinquent
RESPONSE
FREQUENCY PERCENTAGE
Yes
11
36.67
No
19
63.33
Total
30
100
Causes of Loan Repayment Delinquency
Table 11 shows that most (30%) of the respondents mentioned natural calamities
as the cause of their inability to pay their loan on time. This was followed by low
production yield (20%), others were unexpected drop in the number of customers
(16.67%), increase of rental and license fee (13.33%) and commodities are sold on credit
basis with 20%. This finding shows that most of the causes of their delayed payment was
beyond the control of the borrowers.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
21
Table 11. Causes of loan repayment delinquency
CAUSES OF DELINQUENCY
FREQUENCY PERCENTAGE
Natural Calamities
9
30.00
Low Production/yield
6
20.00
Unexpected drops in number of customers
5
16.67
Increase of rental and licenses
4
13.33
Products were sold on credit basis
6
20.00
Total
30
100
Payments of Interest by the Borrowers
Table 12 shows that 100% of the borrowers paid their interest through deduction
from the loan borrowed. This finding shows that the cooperative is collecting interest on
loans in advance.
Table 12. Payment of interest by the borrowers
PAYMENTS
FREQUENCY
PERCENTAGE
Deduction from the loan borrowed
30
100
Paid at maturity date
-
-
Amortization
-
-
TOTAL
30
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
22
Problems Encountered by Borrowers in
Securing Loan
Table 11 presents the problems of the borrowers related to loan application, loan
repayment, and loan enhancement.
Problems on loan application. There were 50% of loan borrowers who
commented on the long duration for processing before loan is released, 46.67% of the
respondents said that they were unaware of the procedures in borrowing, and 3.33%
mentioned delayed approval.
Problems on repayment. There were 3 or 10% who said that they prefer to use
money for other purposes than to use it for paying their loan. Half of the respondents said
they have problem on repaying their loan because of bankruptcy due to natural
calamities. Fourteen or 46.67% mentioned they were unaware of the procedure in
borrowing, 7 or 23.33% said they had no money to pay since the loan since the loan was
not used for its intended purpose.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
23
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted to: determine the profile of the borrowers, find out the
purpose of loan acquired, know the credit policies of the cooperative, find out the factors
affecting loan delinquency of loan barrowers, and find out the problems encountered by
the loan borrowers. This was conducted at La Trinidad Vegetable Trading Post
Multipurpose Cooperative with 30 member-borrowers of LTVPTMPC as respondents.
This was conducted in January 2006.
The mean age of the respondents was 36 years old, majority were female, all of
them had formal education and most of them were college graduate, majority were
engaged in vegetable trading with very few farmers.
Most of the respondents borrowed from the cooperative for vegetable production
purpose while some of them borrowed for capital in their vegetable trading business. For
the emergency loan majority availed for education purpose. The respondents submitted
the following requirements as when they borrowed from the cooperative: real estate
mortgage, chattel mortgage, promissory note, fixed deposit certificate, and time deposit
certificate. Almost all the respondents were able to get their approved loans in less than
one week, except for two respondents whose loans were released after more than two
weeks. All their loans were released in full cash by the cooperative.
Majority of the respondents paid their loan on installment basis. Some paid on a
weekly basis while some paid on a monthly installment and others paid on a quarterly
basis. Very few paid their loan in full amount. There were some respondents who had
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
24
been delinquent in paying their loans and most of them reasoned that their business was
bankrupt due to natural calamities.
The respondents pointed out the following problems related to their loan
availment: long duration of processing their loan, unawareness of the procedure in
borrowing that caused them to process the loan for a long time, delayed approval,
although it was experiences by just one respondent, delinquent in paying their loans
because they used their money for other purposes instead of paying it to the cooperative,
bankruptcy due to natural calamities, and no money to pay their loan because they did not
use their loan for the purpose they intended to use the loan.
Conclusions
Base on the findings of the study, the following conclusions were arrived at:
1. Majority of the members of LTVPTMPC are female, with college education and
are engaged in vegetable trading.
2. Majority of the borrowers availed of the productive loan from the cooperative for
vegetable production and vegetable trading purposes. And most of them borrowed
emergency loan for education purpose.
3. The cooperative accepts real estate mortgage, chattel mortgage, fixed deposit
certificate and time deposit certificate as collaterals for loans.
4. It takes less than one week for the cooperative to release approved loans.
5. Majority of the borrowers paid their loans on installment basis
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
25
6. Some borrowers were delinquent in paying their loans because their business is
either bankrupt due to natural calamities or they used their loan for non-
productive purpose.
7. It took some members to process their loans for several days because they were
unaware of the procedure in applying for a loan.
Recommendations
1. The cooperative should post their loaning procedure in their bulletin board so that
members would know how to process their loan and this would shorten the time
for loan processing.
2. The cooperative should mandate their credit committee to check if loans were
used for the purposes stated in the loan form that were used as bases for releasing
their loans. If loans would be appropriately utilized by the borrowers then
delinquency would be minimized.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
26
LITERATURE CITED
AQUINO, A. 1991. Republic Act No. 6938 and Republic Act 6939, p.1.
BIASE, L.M. 1979. Repayment deficiencies of agricultural loans in Buguias, Benguet,
1977-1978. BS Thesis. Benguet State University, La Trinidad, Benguet Pp. 33,
38-42.
CAWAON, J. 1982. Determination of agricultural credit requirements of small farmer
In Pugo, La Union. B.S. Thesis. Benguet State University. P7.
GANAWED, D. 1997. Credit and repayment performance of loan borrowers of the
Cooperative Bank of Benguet. BS Thesis. Benguet State University, La Trinidad,
Benguet. P.26.
NOLLEDO, J.N. 1986. Principles of Agrarian Reform, Cooperatives, and Taxation. 4th
ed. Caloocan City: Graphic Arts. P. 51.
ONAGAN, L. G. 1973. Cooperative Principles and Practices, Quezon City: Onagan and
Sons Pub. Pp. 75 -76.
SINGH, I.J. 1977. Elements of Farm Management Economics. New Delhi: Affiliated
East-West Press Private Ltd. P. 75.
TAGANAS, P. 1979. Repayment deficiencies of agricultural loan in Bontoc, Mt.
Province. B.S. Thesis. Benguet State University. P.22.
VAN HORNE, J. 1989. Financial Management and Policy. 8th ed. Prentice Hall,
Engelwood Cliffs, New Jersey. Pp 489-507.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
27
APPENDICES
A. Letter to the Respondents
DEPARTMENT OF AGRICULTURAL ECONOMICS
AND AGRIBUSINESS MANAGEMENT
Benguet State University,
La Trinidad, Benguet
January 2006
Dear Sir/Madam,
The undersigned is a BSU graduating student currently conducting her research
entitled “CCREDIT OPERATION OF LA TRINIDAD VEGETABLE TRADING POST
MULTIPURPOSE COOPERATIVE” This research is one of the requirements for
graduation.
In this connection, may I request you to answer my questionnaire honestly. Your
full cooperation is highly appreciated and rest assured that any data you would provide
will be treated with utmost confidence.
Thank you very much for sharing a part of your most precious time to answer my
questionnaire.
Sincerely Yours,
KIMBERLY G. TODYOG
Researcher
NOTED BY:
CLIFTON D. LLANES
Adviser
B. Survey Questionnaire
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
28
CREDIT OPERATION OF LA TRINIDAD VEGETABLE
TRADING POST MULTIPURPOSE COOP
I. GENERAL INFORMATION
1. Name (optional)
Sex ______ Age_______
2. Occupation
No. of years in occupation _________
3. Highest educational attainment
4. Civil status: ( ) single ( ) married ( ) separated ( ) widowed
5. Number of household members ___________
II. MEMBERSHIP IN THE COOPERATIVE
1. Date of membership in the cooperative
2. How did you become a members of the cooperative?
( ) influenced by friends
( ) influenced by relatives
( ) others
3. Are you a member of other cooperatives? ( ) yes ( ) no
4. If yes, what cooperative?
5. Why did you join the cooperative?
( ) the coop is the best place to invest my money
( ) so that I could borrow money
( ) because I believe in the principles of the cooperative
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
29
( ) others
III. BORROWINGS
1. What type of loan have you borrowed from the cooperative?
( ) productive loan ( ) commercial loan ( ) emergency loan
2. What were the requirement you submitted with your loan application?
3. How many days did it take the cooperative to release your loan?
4. What collateral did you submit?
5. How many days did it take you to process your loan?
6. What was the purpose of your loan?
7. Was there a time you were delinquent in paying your loan? ( ) yes ( ) no
8. What caused you to be delinquent?
9. How did you pay your loan? ( ) installment ( ) full payment
10. If installment, what is the interval?
11. What problem did you meet in applying for a loan?
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
30
EXHIBIT 1
CREDIT POLICIES OF THE COOPERATIVE
1. Lending Operation of the cooperative.
An application for loan will only be considered if the applicant has:
a. paid the required membership fee of P500.00,
b). paid the hospitalization aid fund (MAF) fee of P100,
c. paid the medical aid fund fee of P100,
d). subscribed and paid a minimum share
capital of P5,000.00.
e. opened and maintained a savings deposit account of P1,000 minimum
f. Attended and completed the PMES
g. have been a members for at least two (2 ) months
2. Loanable Amount
a. First time to borrow - two time (2x) the amount of share capital. It must, however, be
collateralized if the amount involved need collateral.
b. Second time to borrow- three times the amount of share capital if the members has a
good credit standing. It must, however, be collateralized if the amount involved needs
collateral.
The amount that needs collateral is P30,000 and above. The acceptable collaterals
are as follows: OR/CR of motor vehicle, lot title/tax declaration , share capital. However,
if share capital is P30,000, the members may be granted a loan of P50,000 without
collateral.
3. Security/Collateral of loan
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
31
a. Time deposit holdout- time deposit could part of collateral; the certificate of time
deposit must be surrendered to the cooperative during the term of the loan.
b. Real estate mortgage- location shall be limited to within Baguio and the 13
municipalities of Benguet. The area, if agricultural should be devoted to agricultural
production. The area may be residential lot or with building/ other improvement therein.
The member-borrower shoulders the expenses incurred in the appraisal and
processing of the property being offered as collateral.
c. Chattel Mortgage – good running condition vehicle/jeep complete with OR/CR
regardless of model maybe accepted as collateral for loan.
d. Share capital could be part of collateral
4. Approving and Signing Authorities
a. P30,000 and below – manager
b. P31,000 to P60,000 – manager and credit committee
c. P61,000 and above- credit committee and board of directors
5. Penalty and Grace Period
Tend (10) days grace period after due date. Two percent (2%) maintaining interest
and five percent (5%) is charged monthly after the grace period until such obligation has
been fully paid/settled.
6. Restructuring of Loans
Loans adversely affected by the following shall be considered eligible for
restructuring: natural calamities, pest and diseases and other incidents not attributed to
member-borrower negligence.
7. Reavailment of Loan
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
32
On the grounds that members opted to keep on re-availing loans by paying
regularly the corresponding interest and other charges because of the nature of their
regular business undertakings. This practice therefore, being regular needs appropriate
reclassification of terminology as REAVAILMENT OF LOAN RESTRUCTURING
shall stay as is for future application.
8. Co-makers
Two (2) co-makers who are of good credit standing must sign a loan except:
a. when the amount of loan granted is equal or within the range of the share capital, and
b. when the loan amount is fully collateralized.
9. Prohibitions
a. No member shall be a co-maker for his/her spouse, sisters/brothers or for more than
two (2) borrowers.
b. Members with past due accounts are not qualified as co-makers.
c. no board of director acts a co-maker to another board of director.
10. Collection of Past Dues
The manager to serve notices to co-makers regarding the past dues of member
borrowers whom they have granted to present persons with Past dues.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
KIMBERLY G. TODYOG. MARCH 2006. Credit Operation of the La Trinidad
Vegetable Trading Post Multipurpose Cooperative. enguet State University, La Trinidad,
Benguet.
Adviser: Clifton D. Llanes, BS.
ABSTRACT
This study was conducted to determine/know the following: profile of the
borrowers, purpose of loan acquired, credit policies, factors affecting loan delinquency,
and the problems encountered by the loan borrowers. This was conducted at La Trinidad
Vegetable Trading Post Multipurpose Cooperative with 30 member-borrowers of
LTVPTMPC as respondents in January 2006.
The mean age of the respondents was 36 years old, majority were female, all of
them had formal education and most of them were college graduate, majority were
engaged in vegetable trading with very few farmers.
Members availed of productive loan for vegetable production and for vegetable
trading business. Emergency loans were used mostly for education purpose. It is the
policy of the cooperative to loan only to those who have paid their membership fee, theire
minimum share capital, attended and completed the PMES, and have been a member for
at least two months. The maximum amount to be borrowed is two times one’s paid-up
share capital. The cause’s delinquencies were: borrowers used their money for other
purposes, bankruptcy due to natural calamities, and loans were not used for the intended
purpose.
TABLE OF CONTENTS
Page
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Abstract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Importance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Scope and Delimitation of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
REVIEW OF LITERATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Definition of Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Legal Basis of Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Purpose of Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Types of Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Causes of Failure of Credit Cooperatives. . . . . . . . . . . . . . . . . . . . . . . .
6
Causes of Loan Delinquency
7
Loan Security
8
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
ii
Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Data Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .
11
RESULTS AND DISCUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
General Information About the Respondents . . . . . . . . . . . . . . . . . . . . .
12
Purpose of Loaning . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .
14
Requirements Submitted by the Borrowers
When They Applied for Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Duration of Loan Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Perceptions of Borrowers on the
Release of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
How the Loan was Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Sufficiency of Amount Borrowed for
Purpose Indicated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Loan Repayments by Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Loan Repayment Delinquency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Causes of Loan Repayment Delinquency . . . . . . . . . . . . . . . . . . . . . . .
20
Payments of Interest by the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . .
21
Problems Encountered by Borrowers
in Securing Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
SUMMARY, CONCLUSIONS AND
RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
Recommendations
25
iii
LITERATURE CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
Appendix A. Letter to the Respondents . . . . . . . . . . . . . . . . . . . . . . . .
27
Appendix B. Survey Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
EXHIBIT 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
iv
INTRODUCTION
Rationale of the Study
The La Trinidad Vegetable Trading Post Multipurpose Cooperative (LTVTMPC)
was registered on September 9, 1992 with the Cooperative Development Authority
(CDA). It was originally named as La Trinidad Vegetable Trading Post Allied Services
Cooperative (LTVTPASC) and later was amended as it is named today, upon insistence
of CDA in accordance with the new cooperative guidelines.
Records showed that the cooperative started its operation with initial paid up
share capital of Thirteen thousand Five Hundred Pesos (P13,500.00) only. This was
contributed by the 15 members at P900 each. In the course of time, more people joined
the cooperative as members. They were private and government employees, businessmen
and women, vegetable traders and producers. As of February 28, 2003, there were 897
members and the paid-up share capital and total asset amounted to P11,240,036.80 and
P36,083,226.69, respectively. They owned a four-storey building located at Wangal, La
Trinidad, Benguet.
The foregoing remarkable growth of the cooperative in ten years speaks well of
the loyalty of the members, the strong determination and commitment of the Board of
Directors, committee members and management staff who had been serving, the
cooperative as volunteers in the beginning years. The cooperative had been providing
loans to its members which have helped them in their personal businesses. It is on this
basis that this study was conducted to evaluate the credit operation of the cooperative in
order to find out their good practices that can be emulated by other cooperatives.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
2
Statement of the Problem
The following questions set the focus of the study:
1. What is the profile of the borrowers?
2. What are the purposes of the loan acquired by the borrowers?
3. What are the credit policies of the cooperative?
4. What are the factors affecting loan delinquency of loan barrowers?
5. What are the problems encountered by the borrower?
Objectives of the Study
This study attempted to describe the Credit Operation of the La Trinidad
Vegetable Trading Post Multi Purpose Cooperative and determine the profile of the
borrowers.
1. Determine the profile of the borrowers.
2. To find out the purpose of loan acquired.
3. To know the credit policies of the cooperative.
4. Find out the factors affecting loan delinquency of loan barrowers.
5. To find out the problems encountered by the loan borrowers.
Importance of the Study
The results of this study would guide the board of directors and other officers in
making plans for the improvement of the cooperative operations. Furthermore, it could
also serve as a source of information for further research on other related studies.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
3
Scope and Delimitation of the Study
This study focused on the evaluation of the credit operation of La Trinidad
Trading Post Multipurpose Cooperative to find out if their loan policies are being
followed in their actual lending and collection as perceived by the members.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
4
REVIEW OF LITERATURE
Definition of Cooperative
According to Onagan (1997), a cooperative is an association of persons who join
together to carry an economic activity for their mutual benefit. A cooperative differ from
a corporation in the sense that sharing of benefits in a cooperative is based on the
principle of equity unlike the corporation that is based on shares of stocks or the amount
of capital invested in the business. Membership of the cooperative is open and voluntary,
meaning that anyone who satisfies certain non-decimator conditions may join the
cooperative. Each member of the cooperative is entitled to only one vote.
Aquino (1991) stated that a cooperative is a duly registered association of
persons, with a common bond of interest, who have voluntarily joined together to achieve
a lawful common social and economic end, making equitable contributions to the capital
required and accepting a fair share of the risk and benefits of the undertaking in
accordance with the universally accepted cooperative principles.
Legal Basis of Cooperative
Republic Act Number 6938, Article 2, otherwise known as the Cooperative Code
of the Philippines, declared that it is a state policy to foster the creation and growth of
cooperatives as a practical vehicle for promoting self-reliance and harnessing people’s
power toward the attainment of economic development and social justice. The state shall
encourage sector to undertake actual formation and organization of cooperatives and shall
create atmosphere that is conducive to the growth and development of their cooperative.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
5
Toward this end, the government and all its branches, subdivision, instrumentalities and
agencies shall ensure the provision of technical guidance, financial assistance and other
services to enable the said cooperatives to develop into viable and responsive economic
enterprises that thereby brings a strong cooperative movement that is free from any
condition that might infringe upon autonomy or organizational integrity of the
cooperatives.
Purpose of Cooperatives
Article 6 of Republic act 6938 states that a cooperative may be organized and
registered by at least 15 members for any of the following purposes:
a. To encourage thrift and savings mobilization among members.
b. To encourage among members systematic production and marketing.
c. To generate funds and extend credit to members for productive and provident
purposes.
d. To promote goods and services and other requirements to the members.
e. To acquire lands and provide housing benefits for the members.
f. To ensure against losses of the members.
g. To promote and advance the economic, social, educational status of members.
h. To establish, own, and lease operate cooperative banks, cooperative wholesale and
credit complexes, insurance and agricultural and industrial processing enterprise and
public markets.
i. To coordinate and facilitate the activities of the cooperatives.
j. To undertake any and all other activities for the effective and efficient implementation
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
6
of the provision of the code.
Types of Cooperative
Nolledo (1976) mentioned different types of cooperatives, credit cooperative,
consumer cooperative, marketing cooperative, producers cooperative, and service
cooperative. Majority of the cooperatives registered with the CDA are multipurpose
cooperatives. Being a multipurpose cooperative, they offer more than one type of service
depending on the need of their members. The credit union is a type of cooperative that
pool the money of the members then give them as loans to their members.
Causes of Failure of Credit Cooperatives
According to Taganas (1979), the failure cooperatives are often due to the failure
of member-borrowers to pay their loan or the delinquency of members in paying their
loans. The failure of farmers to pay their loans on time according to Taganas was because
the money was diverted to non-farm activities such as food, house repair, education and
recreation. Some loans were used to settle other accounts from suppliers of farm inputs.
Cawaon (1982) stated that the practice of requiring loan collateral for loaning is
the protection of the investors for losses due to the failure of the business or bad faith of
barrowers. Credit cooperatives are faced with viability problem caused mainly by the
delinquency on loan receivables. Loan capacity is impaired by such delinquency so that
other possible beneficiaries lose opportunity to borrow and use loans as complements for
sustaining capital. This is especially true in community based cooperative. Trends show
high seasonal peaks of loan application. Sometimes resulting in suspension of loan
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
7
releases definitely displease members a consequent of these delays or suspension of loan
releases.
Singh (1977) stated that repayment capacity is a test of economic feasibility. It is
generally assumed that if an investment is profitable, the loan can be paid without any
difficulty. The poor payment of a farmer may due to either a one or more of the
following:
1. Small size of the farm business which results to small income.
2. Low productivity due to poor land.
3. Low price of farm products, distress sales and low infrastructure.
4. High production cost.
5. Diversion of loan for unproductive purposes.
6. High cost of living.
As stated on the handbook on Agrarian Reform and Taxation (1975), one of the
main problem of the cooperative development is the lack of competent staff at various
level of qualification. This shortage of adequately trained staff is especially acute in the
field of management; hence, some kind of emergency action is acquired in many cases of
cooperative in order that the members apply their role as efficient instrument of social
and economic development.
Causes of Loan Delinquency
The causes of difficulty in loan payment by farmers as identified by Biase (1979)
were as follows: money of the farmers was spent for other purposes, low production, crop
damaged due to natural calamities, wrong timing of collection, low market price, high
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
8
cost of production, and lack of transportation facilities. Biase further mentioned that the
personal characteristics of the farmer affect loan repayment delinquency. These personal
characteristics included household size, educational attainment, and farming experience.
Ganawed (1997) also identified natural calamities, low market price, high cost of
production, and lack of transportation facilities.
Loan Security
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 debt. In
order to make a loan, lenders require security that will reduce 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 source fails for some reason, the collateral value of the
security. Most lenders will not make a loan unless the firm has sufficient expected cash
flows to make proper servicing of debt probable. To reduce their risk further, lenders
require security. Secured lending arrangements are mostly costly to administer than
unsecured loans and that the incremental cost is passed on to the borrower in the form of
fees and higher interest costs than 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
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
9
borrower has no other alternatives. The use of security is negotiated in keeping with
conditions in the overall market for loans ( Van Horne, 1989).
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
10
METHODOLOGY
Locale and Time of the Study
This study was conducted at La Trinidad Vegetable Trading Post Multipurpose
Cooperative from January to February 2006.
Respondents of the Study
The respondents of this study were the Manager and Bookkeeper of La Trinidad
Vegetable Trading Post Multipurpose Cooperative and 30 member barrowers.
Data Collection
An interview guide was used to obtain data from the manager and officers of the
cooperative. For the member-borrowers, a prepared questionnaire was floated to them.
Points that need to be clarified were asked personally by the researcher from the
respondents. Existing written credit policies as well as loan documents were the other
sources of information on operations procedure, type of loan applied for; and payments of
loans.
Data Collected
In order to answer the objectives, the following data were collected: purpose of
loan, credit policies of the coop, factors affecting loan delinquency of loan borrowers.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
11
Data Analysis
The data gathered was analyzed and interpreted according to the objectives of the
study. Statistical tools such as frequency counts, means, and percentage were used in the
analysis.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
12
RESULTS AND DISCUSSION
General Information About the
Respondents
Table 1 presents the age, sex, civil status, educational attainment and occupation
of the respondents.
Sex. Among the 30 respondents, 73.33% were female and 26.67% were male.
According to many of the respondents, females are greater in number than the males in
the cooperative membership because the female had enough time to attend all the
cooperative activities. The males on the other hand, were always busy on their business
transaction on the field especially for farmers.
Age. As shown in the table, the respondents’ mean age was 36 years old. Most
36.67% belonged to the age bracket of 36 -45 years old. Some 23.33% belonged to age
bracket of 25 – 35 years old, 30% belonged to 46 -55 years old and 10% belonged to 55 -
60 years old.
Civil status. Table 1 shows that most (63.33%) of the respondents were married,
26.67% of the respondents were single, and 10% were respectively widowed.
Educational attainment. On the educational attained, almost all (100%) of the
respondents had gone to school. Table 1 shows that most of the respondents (46.67%)
had finished college education; 36.67% high school, 16.67% were elementary graduates,
and 6.67% were vocational graduates.
Occupation. Most (40%) of the respondents were vendors; 33.33%, vegetable
dealers; 13.33%, vegetable traders, 10%, were farmers, and 3.33%, retailer.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
13
Table 1. Profile of the respondents
PARTICULARS
FREQUENCY
PERCENTAGE
a. Sex
Female
22
73.33
Male
8
26.67
Total
30
100
b. Age
25 – 35
7
23.33
36 – 45
11
36.67
46 – 55
9
30
56 - 60
3
10
Total
30
100
c. Civil Status
Single
8
26.67
Married
19
63.33
Widowed
3
10
Total
30
100
d. Educational Attainment
Elementary
3
10
High School
10
33.33
College
14
46.67
Vocational Graduate
2
6.67
Total
30
100
e. Occupation
Dealer
10
33.33
Farmer
3
10
Vendor
12
40
Retailer
1
3.33
Trader
4
13.33
Total
30
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
14
Purpose of Loaning
Table 2 presents the two types of loan according to purpose:
Productive loan. As presented, most of the individual borrowers (60%) obtained
loans for vegetable production and (40%) for business capital.
Emergency loan. The table shows that educational loan was the major purpose of
most individual borrowers with a percentage of 66.67% followed by hospitalization and
medical with percentage of 26.67% and dry goods, sari-sari store, both with 3.33%.
Table 2. Loaning purpose of individual borrowers
PURPOSES
FREQUENCY
PERCENTAGE
a. Productive Loan
Vegetable production
18
60
Business capital (Trade)
12
40
b. Emergency Loan
Hospitalization/Medical
8
26.67
Education
20
66.67
Dry Goods (wagwagan)
1
3.33
Sari-sari store
1
3.33
Requirements Submitted by the Borrowers
When They Applied for Loan
The requirements submitted by the respondents when they applied for loan real
estate mortgage and chattel mortgage as mentioned by 33.33% and 30%, respectively.
Nine respondents or 30% said they submitted a promissory note while one respondent
each submitted a fixed deposit certificate, and a checking account (Table 3).
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
15
Table 4 presents the reasons why they submitted all these requirements. As
mentioned by 53.33% of the respondents, these requirements served as security measure
for the cooperative while 14 or 46.67% said that it is the traditional practice of the
cooperative. This finding implies that at least the member-borrowers were aware of the
credit policies of the cooperative.
Table 3. Requirements submitted by the members when they applied for loan and the
reasons for the requirements
REQUIREMENTS
FREQUENCY
PERCENTAGE
Real estate mortgage
10
33.33
Chattel mortgage
9
30
Promissory note
9
30
Fixed deposit
1
3.33
Checking account
1
3.33
Total
30
100
REASONS
Security measure for the cooperative
16
53.33
Traditional practice in lending operation
14
46.67
Total
30
100
Duration of Loan Processing
Table 4 presents the duration of loan processing by the loan borrowers. It shows
that most 93.33% of the respondents processed their loan from three to seven days,
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
16
3.33% of the respondents processed their loans for two to three weeks, and 3.33% of loan
borrowers processed their loans for four weeks and above. This means that the borrowers
usually get their loan less than a week after filing. The duration of processing also
depends on the type of loan and the requirements to be attached to the application form.
Table 4. Duration of loan processing by loan borrowers
DURATION
FREQUENCY
PERCENTAGE
1 week and below
28
93.33
2 – 3 weeks
1
3.33
4 weeks and above
1
3.33
Total
30
100
Perceptions of Borrowers on the Release of Loans
Table 5 presents that most response of the borrowers regarding the immediate
release of approved loans. The borrowers were asked if approved loans were released
immediately, almost all (93.33%) the respondents had a positive response. This implies
that almost all the borrowers received their loans upon approval. However, there were 2
who said that their approved loans were not immediately released because the credit
committee did not meet first before the approval of the loan.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
17
Table 5 . Reponses of borrowers if approved loans are immediately release
RESPONSE
FREQUENCY
PERCENTAGE
Immediately released
28
93.33
Not immediately released
2
6.67
Total
30
100
Reason for not releasing immediately
Credit committee has to meet first
2
100
How the Loan was Released
The borrowers were asked if the cooperative released their loans either in full
cash or installment. As found in Table 6, all the respondents received their loan in full
cash after it was approved. This finding implies that the cooperative usually release loans
of their members in full cash. There may be a rare case when the loan was released on
installment but this is not the usual practice of the cooperative.
Table 6. How approved loan were released
METHODS
FREQUENCY
PERCENTAGE
Full cash
30
100
Installment
-
-
TOTAL
30
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
18
Sufficiency of Amount Borrowed
for Purpose Indicated
Table 7 presents the responses of the borrowers if the amount borrowed was
enough for the purpose stated in the loan form. The result shows that 70% responded that
the amount loaned was enough for the purpose but 30% said that the loan was not enough
for their purpose. The amount borrowed may not be enough because the capital
requirement for their business was bigger than what they could borrow from the
cooperative. However, the cooperative cannot loan the whole amount they needed
because it was not in accordance with their policy.
Table 7. Opinion on the sufficiency of amount borrowed
RESPONSE
FREQUENCY PERCENTAGE
Sufficient
21
70
Not sufficient
9
30
TOTAL
30
100
Loan Repayment by Borrowers
Table 8 presents that the borrowers paid their loans either through the loan
collector or personally go to the office of the cooperative and pay there. Twenty five or
83.33% paid to the loan collector and five or 16.67% paid their loan at the office of the
cooperative. This implies that majority of the member-borrowers paid their loans to the
collector. The table further shows that 20% of the borrowers paid their loan in full cash
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
19
upon maturity, while 80% paid their loans on installment. This finding implies that
majority of the borrowers pay their loan on installment.
Terms of installment payment. Of the 24 respondents who paid on installment,
43.33% repaid their loans weekly, 16.67% repaid their loans monthly, and 20% repaid
their loans quarterly.
Table 8. Practices of respondents in paying their loans
PARTICULAR
FREQUENCY PERCENTAGE
a. To whom payments were given
Through the collector
25
83.33
Pay to the cashier at the office
5
16.67
Total
30
100
b. Mode of payment
Lump sum payment
6
20
Installment
24
80
Total
30
100
c. Installment interval
Weekly
13
43.33
Monthly
5
16.67
Quarterly
6
20.00
Total
24
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
20
Loan Repayment Delinquency
Table 10 presents the responses of the respondents as to whether or not they had
been delinquent in paying their loans. According to 11 respondents or 36.67% they had
been delinquent in paying their loans while 63.33% said they have not been delinquent.
This finding implies that the incidence of delinquent borrowers in the cooperative was
high as evidenced by the percentage of respondents who have been delinquent.
Table 10. Responses of borrower-respondents if they had been delinquent
RESPONSE
FREQUENCY PERCENTAGE
Yes
11
36.67
No
19
63.33
Total
30
100
Causes of Loan Repayment Delinquency
Table 11 shows that most (30%) of the respondents mentioned natural calamities
as the cause of their inability to pay their loan on time. This was followed by low
production yield (20%), others were unexpected drop in the number of customers
(16.67%), increase of rental and license fee (13.33%) and commodities are sold on credit
basis with 20%. This finding shows that most of the causes of their delayed payment was
beyond the control of the borrowers.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
21
Table 11. Causes of loan repayment delinquency
CAUSES OF DELINQUENCY
FREQUENCY PERCENTAGE
Natural Calamities
9
30.00
Low Production/yield
6
20.00
Unexpected drops in number of customers
5
16.67
Increase of rental and licenses
4
13.33
Products were sold on credit basis
6
20.00
Total
30
100
Payments of Interest by the Borrowers
Table 12 shows that 100% of the borrowers paid their interest through deduction
from the loan borrowed. This finding shows that the cooperative is collecting interest on
loans in advance.
Table 12. Payment of interest by the borrowers
PAYMENTS
FREQUENCY
PERCENTAGE
Deduction from the loan borrowed
30
100
Paid at maturity date
-
-
Amortization
-
-
TOTAL
30
100
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
22
Problems Encountered by Borrowers in
Securing Loan
Table 11 presents the problems of the borrowers related to loan application, loan
repayment, and loan enhancement.
Problems on loan application. There were 50% of loan borrowers who
commented on the long duration for processing before loan is released, 46.67% of the
respondents said that they were unaware of the procedures in borrowing, and 3.33%
mentioned delayed approval.
Problems on repayment. There were 3 or 10% who said that they prefer to use
money for other purposes than to use it for paying their loan. Half of the respondents said
they have problem on repaying their loan because of bankruptcy due to natural
calamities. Fourteen or 46.67% mentioned they were unaware of the procedure in
borrowing, 7 or 23.33% said they had no money to pay since the loan since the loan was
not used for its intended purpose.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
23
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted to: determine the profile of the borrowers, find out the
purpose of loan acquired, know the credit policies of the cooperative, find out the factors
affecting loan delinquency of loan barrowers, and find out the problems encountered by
the loan borrowers. This was conducted at La Trinidad Vegetable Trading Post
Multipurpose Cooperative with 30 member-borrowers of LTVPTMPC as respondents.
This was conducted in January 2006.
The mean age of the respondents was 36 years old, majority were female, all of
them had formal education and most of them were college graduate, majority were
engaged in vegetable trading with very few farmers.
Most of the respondents borrowed from the cooperative for vegetable production
purpose while some of them borrowed for capital in their vegetable trading business. For
the emergency loan majority availed for education purpose. The respondents submitted
the following requirements as when they borrowed from the cooperative: real estate
mortgage, chattel mortgage, promissory note, fixed deposit certificate, and time deposit
certificate. Almost all the respondents were able to get their approved loans in less than
one week, except for two respondents whose loans were released after more than two
weeks. All their loans were released in full cash by the cooperative.
Majority of the respondents paid their loan on installment basis. Some paid on a
weekly basis while some paid on a monthly installment and others paid on a quarterly
basis. Very few paid their loan in full amount. There were some respondents who had
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
24
been delinquent in paying their loans and most of them reasoned that their business was
bankrupt due to natural calamities.
The respondents pointed out the following problems related to their loan
availment: long duration of processing their loan, unawareness of the procedure in
borrowing that caused them to process the loan for a long time, delayed approval,
although it was experiences by just one respondent, delinquent in paying their loans
because they used their money for other purposes instead of paying it to the cooperative,
bankruptcy due to natural calamities, and no money to pay their loan because they did not
use their loan for the purpose they intended to use the loan.
Conclusions
Base on the findings of the study, the following conclusions were arrived at:
1. Majority of the members of LTVPTMPC are female, with college education and
are engaged in vegetable trading.
2. Majority of the borrowers availed of the productive loan from the cooperative for
vegetable production and vegetable trading purposes. And most of them borrowed
emergency loan for education purpose.
3. The cooperative accepts real estate mortgage, chattel mortgage, fixed deposit
certificate and time deposit certificate as collaterals for loans.
4. It takes less than one week for the cooperative to release approved loans.
5. Majority of the borrowers paid their loans on installment basis
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
25
6. Some borrowers were delinquent in paying their loans because their business is
either bankrupt due to natural calamities or they used their loan for non-
productive purpose.
7. It took some members to process their loans for several days because they were
unaware of the procedure in applying for a loan.
Recommendations
1. The cooperative should post their loaning procedure in their bulletin board so that
members would know how to process their loan and this would shorten the time
for loan processing.
2. The cooperative should mandate their credit committee to check if loans were
used for the purposes stated in the loan form that were used as bases for releasing
their loans. If loans would be appropriately utilized by the borrowers then
delinquency would be minimized.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
26
LITERATURE CITED
AQUINO, A. 1991. Republic Act No. 6938 and Republic Act 6939, p.1.
BIASE, L.M. 1979. Repayment deficiencies of agricultural loans in Buguias, Benguet,
1977-1978. BS Thesis. Benguet State University, La Trinidad, Benguet Pp. 33,
38-42.
CAWAON, J. 1982. Determination of agricultural credit requirements of small farmer
In Pugo, La Union. B.S. Thesis. Benguet State University. P7.
GANAWED, D. 1997. Credit and repayment performance of loan borrowers of the
Cooperative Bank of Benguet. BS Thesis. Benguet State University, La Trinidad,
Benguet. P.26.
NOLLEDO, J.N. 1986. Principles of Agrarian Reform, Cooperatives, and Taxation. 4th
ed. Caloocan City: Graphic Arts. P. 51.
ONAGAN, L. G. 1973. Cooperative Principles and Practices, Quezon City: Onagan and
Sons Pub. Pp. 75 -76.
SINGH, I.J. 1977. Elements of Farm Management Economics. New Delhi: Affiliated
East-West Press Private Ltd. P. 75.
TAGANAS, P. 1979. Repayment deficiencies of agricultural loan in Bontoc, Mt.
Province. B.S. Thesis. Benguet State University. P.22.
VAN HORNE, J. 1989. Financial Management and Policy. 8th ed. Prentice Hall,
Engelwood Cliffs, New Jersey. Pp 489-507.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
27
APPENDICES
A. Letter to the Respondents
DEPARTMENT OF AGRICULTURAL ECONOMICS
AND AGRIBUSINESS MANAGEMENT
Benguet State University,
La Trinidad, Benguet
January 2006
Dear Sir/Madam,
The undersigned is a BSU graduating student currently conducting her research
entitled “CCREDIT OPERATION OF LA TRINIDAD VEGETABLE TRADING POST
MULTIPURPOSE COOPERATIVE” This research is one of the requirements for
graduation.
In this connection, may I request you to answer my questionnaire honestly. Your
full cooperation is highly appreciated and rest assured that any data you would provide
will be treated with utmost confidence.
Thank you very much for sharing a part of your most precious time to answer my
questionnaire.
Sincerely Yours,
KIMBERLY G. TODYOG
Researcher
NOTED BY:
CLIFTON D. LLANES
Adviser
B. Survey Questionnaire
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
28
CREDIT OPERATION OF LA TRINIDAD VEGETABLE
TRADING POST MULTIPURPOSE COOP
I. GENERAL INFORMATION
1. Name (optional)
Sex ______ Age_______
2. Occupation
No. of years in occupation _________
3. Highest educational attainment
4. Civil status: ( ) single ( ) married ( ) separated ( ) widowed
5. Number of household members ___________
II. MEMBERSHIP IN THE COOPERATIVE
1. Date of membership in the cooperative
2. How did you become a members of the cooperative?
( ) influenced by friends
( ) influenced by relatives
( ) others
3. Are you a member of other cooperatives? ( ) yes ( ) no
4. If yes, what cooperative?
5. Why did you join the cooperative?
( ) the coop is the best place to invest my money
( ) so that I could borrow money
( ) because I believe in the principles of the cooperative
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
29
( ) others
III. BORROWINGS
1. What type of loan have you borrowed from the cooperative?
( ) productive loan ( ) commercial loan ( ) emergency loan
2. What were the requirement you submitted with your loan application?
3. How many days did it take the cooperative to release your loan?
4. What collateral did you submit?
5. How many days did it take you to process your loan?
6. What was the purpose of your loan?
7. Was there a time you were delinquent in paying your loan? ( ) yes ( ) no
8. What caused you to be delinquent?
9. How did you pay your loan? ( ) installment ( ) full payment
10. If installment, what is the interval?
11. What problem did you meet in applying for a loan?
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
30
EXHIBIT 1
CREDIT POLICIES OF THE COOPERATIVE
1. Lending Operation of the cooperative.
An application for loan will only be considered if the applicant has:
a. paid the required membership fee of P500.00,
b). paid the hospitalization aid fund (MAF) fee of P100,
c. paid the medical aid fund fee of P100,
d). subscribed and paid a minimum share
capital of P5,000.00.
e. opened and maintained a savings deposit account of P1,000 minimum
f. Attended and completed the PMES
g. have been a members for at least two (2 ) months
2. Loanable Amount
a. First time to borrow - two time (2x) the amount of share capital. It must, however, be
collateralized if the amount involved need collateral.
b. Second time to borrow- three times the amount of share capital if the members has a
good credit standing. It must, however, be collateralized if the amount involved needs
collateral.
The amount that needs collateral is P30,000 and above. The acceptable collaterals
are as follows: OR/CR of motor vehicle, lot title/tax declaration , share capital. However,
if share capital is P30,000, the members may be granted a loan of P50,000 without
collateral.
3. Security/Collateral of loan
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
31
a. Time deposit holdout- time deposit could part of collateral; the certificate of time
deposit must be surrendered to the cooperative during the term of the loan.
b. Real estate mortgage- location shall be limited to within Baguio and the 13
municipalities of Benguet. The area, if agricultural should be devoted to agricultural
production. The area may be residential lot or with building/ other improvement therein.
The member-borrower shoulders the expenses incurred in the appraisal and
processing of the property being offered as collateral.
c. Chattel Mortgage – good running condition vehicle/jeep complete with OR/CR
regardless of model maybe accepted as collateral for loan.
d. Share capital could be part of collateral
4. Approving and Signing Authorities
a. P30,000 and below – manager
b. P31,000 to P60,000 – manager and credit committee
c. P61,000 and above- credit committee and board of directors
5. Penalty and Grace Period
Tend (10) days grace period after due date. Two percent (2%) maintaining interest
and five percent (5%) is charged monthly after the grace period until such obligation has
been fully paid/settled.
6. Restructuring of Loans
Loans adversely affected by the following shall be considered eligible for
restructuring: natural calamities, pest and diseases and other incidents not attributed to
member-borrower negligence.
7. Reavailment of Loan
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
32
On the grounds that members opted to keep on re-availing loans by paying
regularly the corresponding interest and other charges because of the nature of their
regular business undertakings. This practice therefore, being regular needs appropriate
reclassification of terminology as REAVAILMENT OF LOAN RESTRUCTURING
shall stay as is for future application.
8. Co-makers
Two (2) co-makers who are of good credit standing must sign a loan except:
a. when the amount of loan granted is equal or within the range of the share capital, and
b. when the loan amount is fully collateralized.
9. Prohibitions
a. No member shall be a co-maker for his/her spouse, sisters/brothers or for more than
two (2) borrowers.
b. Members with past due accounts are not qualified as co-makers.
c. no board of director acts a co-maker to another board of director.
10. Collection of Past Dues
The manager to serve notices to co-makers regarding the past dues of member
borrowers whom they have granted to present persons with Past dues.
Credit Operation of the La Trinidad Vegetable Trading Post Multipurpose
Cooperative / Kimberly G. Todyog. 2006
Document Outline
- Credit Operation of the La TrinidadVegetable Trading Post Multipurpose Cooperative
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- REVIEW OF LITERATURE
- METHODOLOGY
- RESULTS AND DISCUSSION
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- LITERATURE CITED
- APPENDICES