BIBLIOGRAPHY MOLCHINO, CHARLENE T. APRIL 2008....
BIBLIOGRAPHY
MOLCHINO, CHARLENE T. APRIL 2008. Profile of Loan and Repayment of
Borrower in Police Regional Office – Cordillera Employees Multipurpose Cooperative
(PRO-COR-EMPUC) in Camp Bado Dangwa, La Trinidad, Benguet. Benguet State
University, La Trinidad Benguet.
Adviser: Marie Klondy T. Dagupen, PhD
ABSTRACT
This study was conducted in Camp Bado Dangwa, La Trinidad, Benguet in July
2007 to determine the profile of the loans of members of the PRO-COR-EMPUC, the
loan repayment performance of the loan borrowers, the problem encountered by the
borrowers, causes of loan delinquency and to determine some alternative measure to
improve credit repayment performance of loan borrowers to PRO-COR-EMPUC.
The sources of data in the study were 50 respondents who were chosen at random.
The data were gathered through survey questionnaire.
Majority of the respondents were females, married and had reached college
education. The community availed loans were the providential for child educational and
for medical. A borrower should submit to the before one could avail of the loan.
Requirements include pay slip, authority to cooperative requirements deduct, promissory
note, project proposal and deed of assignment of salary.
The PRO-COR-EMPUC offered only short term loan grants from one to three
months.
The credit committee approves the loan and loan were release upon approval if
funds are available. For the payment of interest most of the borrowers pre-deduct from
the loan borrowed while the other borrower paid upon maturity.
The repayment of loan by the loan borrowers were through the PRO-COR-
EMPUC collector or pay personally to the cooperative. Most of the borrowers were
reminded of their balance when it is due through either letter or phone. Seventy two
percent of the respondents were able to pay their loan on the due date and the source of
funds by the loan borrowers were from their salaries.
The identified problems during loan application were long duration of loan
processing, delayed loan approval, many requirements to accomplish, distance of the
Cooperative, unawareness of the procedures in borrowing, and limited money available
for lending, as for loan release were delayed of repayment, borrowers cannot pay due to
financial constraints and some have to pay bills for hospitalization or education.
Factors affecting loan delinquency like unexpected family problem, commitments
with other lending institutions and the term is not enough.
The cooperatives should still find ways to improve their management practices,
operations and policy implementation. Continues education not only the officers but also
to the members should be done.
ii
TABLE OF CONTENTS
Page
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
INTRODUCTION
Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Significance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
REVIEW OF LITERATURE
Nature of the Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Purpose of Member in Availing Loan . . . . . . . . . . . . . . . . . . . . . . .
5
Repayment Capacity of Borrowers . . . . . . . . . . . . . . . . . . . . . . . . .
6
Problems Encountered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Reasons of Loan Repayment Delinquency . . . . . . . . . . . . . . . . . . .
7
Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
METHODOLOGY
Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Methods of Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
RESULTS AND DISCUSSION
Profile of Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
iii
Types of Loan Availed by the Respondents . . . . . . . . . . . . . . . . . . .
12
Requirements in Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Maturity of Loans by chosen the Borrowers . . . . . . . . . . . . . . . . . .
14
Duration of Loan Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Perception of Respondents on Timeliness
of Loan Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Methods of Loan Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Manner of Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Loan Repayment Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Terms of Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Reminder about Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Causes of Loan Delinquency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Problems Encountered by Borrowers in
Securing Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Alternative Measures to Improve Credit
Repayment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
SUMMARY, CONCLUSION AND RECOMMENDATION
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
LITERATURED CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Letter to the Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
SURVEY QUESTIONNAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
iv
INTRODUCTION
Rationale of the Study
The Philippine National Police Regional Office Cordillera Employees
Multipurpose Cooperative (PRO-COR-EMPUC) was established through the initiative of
the Officer of the Director for personnel and Records Management (ODPRM), National
Headquarters by virtue of a Memorandum dated February 28, 2001.
PRO-COR-EMPUC started the concept of lending through Paluwagan system,
after the formulation of the Constitution and by-laws. Out of the 31 incorporators, nine
(9) members paid-up share capital of Php 500, a total of Php 4,500. From July to
February 2007, membership increased to 343 members and the membership share capital
increased to Php 811,964.04.
PRO-COR-EMPUC was duly registered with the Cooperative Development
Authority (CDA) on June 29, 2001, under Republic Act 6933. The members of the
cooperative are the Police Non-Commission Office (PNCO), Police Commission Office
(PCO) and Non-Uniform Office (NUP), retired personnel and their dependents.
The purposes of organizing the PRO-COR-EMPUC were to encourage thrift and
savings mobilization among its members, capital formation, to provide loans at
reasonable cost to its members, to provide related services for the members, for self
governance and to improve socio and economic status of members.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
2
Statement of the Problem
The study sought answer to the following questions:
1. What is the profile of the loans of members of the PNP Regional Office
Cordillera Employees Multipurpose Cooperative (PRO-COR-EMPUC) as to:
a. Purpose of loaning
b. Requirements in borrowing loans
c. Maturity of loan
d. Duration of loan processing
e. Methods of loan release
f. Interest of loan
g. Amount of loan
2. How do borrowers repay their loans as to:
a. Means of repayment
b. Methods of repayment
c. Timelines of repayment
d. Sources of funds for repayment
3. What are the problems encountered by the borrowers in the following stages:
a. Loan application
b. Loan released
c. Loan repayment
4. What are the factors affecting loan delinquency?
5. What are the alternative measure to improve credit repayment performance.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
3
Objectives of the Study
The study aimed to:
1. Determine the profile of the loans of members of the PNP Regional Office
Cordillera Employees Multi-purpose Cooperative (PRO-COR-EMPUC)
Cooperative as to:
a. Purpose of loaning
b. Requirements in borrowing loans
c. Maturity of loan
d. Duration of loan processing
e. Methods of loan release
f. Interest of loan
g. Amount of loan
2. Determine the loan repayment performance of the loan borrowers as to:
a. Means of repayment
b. Methods of repayment
c. Timeliness of repayment
d. Sources of funds for repayment
3. Determine the problems encountered by the borrowers in the following stages:
a. Loan application
b. Loan released
c. Loan repayment
4. Determine the factors affecting loan delinquency.
5. Determine the alternative measures to improve credit repayment performance.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
4
Importance of the Study
The findings of the study is hoped to serve as reference for the PRO-COR-
EMPUC and its borrowers to improve credit operations and lending practices and also for
different credit institutions.
Likewise, this study is hoped to serve as reference for students of economics,
extension and agribusiness who may be interested in conducting similar studies.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
REVIEW OF LITERATURE
Nature of the Cooperative
The Cooperative Code of the Philippines (1990), states that cooperative is a duly
registered association of persons, with 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 ad accepting a fair share of the risk and benefit of the
undertaking in accordance with the universally accepted cooperative principles (Pimentel,
and Cua, 1994).
Purpose of Member in Availing Loan
The purpose of money is to facilitate the transfer of value over space and time. In
other words, we use it to exchange wealth geographically, and to provide for future
payment. Without money, which is in effect an intermediate good used for trading, it
would become very difficult to have a division of labor, i.e., specialization, and
everyone’s standard of living would suffer.
Some small businesspersons cannot understand why a lending institution refused
to lend them money. Others have no trouble getting funds, but they are surprised to find
strings attached to their loans. Such owner managers fails to realize that banks and other
lenders have to operate by certain principles just like other types of business
(www.How.to device.com./borrowers, 2006).
The ADB (1987), stated that granting loans and financing projects of the banks
aimed at improving the facilities, education, and improve physical amenities; they added
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
6
that higher productivity and higher incomes for small farmers and landless peasants are
among the anticipated benefits from loans.
Likewise, the commercial borrowers use loans to finance their commercial
business such as sari-sari store, restaurant /eatery, vegetable trading, dry goods stall, shoe
repair shop, auto repair shop and other commercial activities.
Repayment Capacity of Borrowers
Repayment capacity is the major basis in the determination of the amount of loan
granted. These represent the person’s ability to use and manage credit wisely as
measured by the stable and reasonable amount of profit (Dumagat, 1977).
Singh (1977), further stated that the repayment capacity is a test of economic
feasibility if the loan can be repaid without difficulty.
It is generally attained if an investment is profitable. The poor repayment ability
of a farmer maybe due to the following:
a. Small size of farm business which gives a small income
b. Low production due to poor land
c. Low prices of farm products, distress sales and low infrastructure
d. High production cost
e. Diversion of loans for importation purpose and high cost of living.
Furthermore, Sacay (1985) cited that the factors affecting repayment but were
outside the control of the program participants included calamities, small size and low
market price, they added that findings in the impact.
Agustin (2000), found out in her study that majority of his respondents said that
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
7
training decreases delinquency rate while the rest of the respondents said that training did
not bring down delinquency rate. However, those 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 a member and
became aware of their benefits from the cooperative.
This implies that most members of both types of cooperatives have understood the
advantages of paying their loans at maturity date.
Problems Encountered
According to Dequit (2003), in the loaning process, people in the rural areas
hardly have any access to institutionalize credit facilities to reasonable term. The cover
risk of loans practically deprives the small farmers of the services of the usual credit
system.
David (1990) offered some guidelines to loaners, this include: a) devising a
supervision of credit to fit the needs of the farmers, and b) guidance of farmers from farm
production to marketing of products by bank technicians.
Reasons for Loan Repayment Delinquency
Based on the study of Ganawed (1997) and Cawaon (1982) loan delinquency was
due to high cost of production, low production output, low market price of crops and
money was used for other purposes. Ganawed further mentioned that in her study on the
Cooperative Bank of Benguet, she found out that the most contributory factor to non-
repayment of farmer borrower was the diversion of loaned amount to non-farm expenses
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
8
like food, building or repair/improvement of a house and recreation.
Brazil (2002), stated that most farmers are incapable of paying their loans for the
reason that there is low rate of production, lack of market and low level of capacity
among members. The study found out that this was due to improper farm management,
which means that the farmers did not use high yielding seeds, did not follow the required
fertilizer and lack of irrigation facilities.
The low repayment of borrowers was attributed to the low department repayment
capacity of the farmers due to unfavorable farm credit business and poor administration
with the failure of the credit function, the marketing operation also suffered delinquent
borrowers did not deliver their crops to there FACOMA’S, and the volume of marketing
business declined as the clientele was limited to non-delinquent borrowers and non-
borrowers. Many FACOMA’S were found to be loosely organized and financially
incapable of assuming the risks associated with the loaning operations and unfavorable
external competition ( Abasolo et. al, 1996).
Supanga (2002) further enumerated the common causes of ,loan delinquency as
irrelevance of loan policies, irresponsible processing system, weak collector system, lack
of security on loans, poor example of officer, several loans and lack of cooperative
education.
Definition of Terms
Loan – borrowed money or goods from the cooperative where a certain interest is added
Profile- background information about the respondents and cooperative
Maturity date – the date when the full loan is due to be paid.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
9
Delinquent loan – loan where the borrower is late in paying the loan.
Default loan – one where the borrower cannot or will not repay at all
Loan Repayment- it is a extinguishing liabilities
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
METHODOLOGY
Locale and Time of the Study
The study was conducted at the PNP PRO-COR-EMPUC located in Camp Bado
Dangwa , La Trinindad, Benguet from April 2007 to May 2007.
Respondents of the Study
The respondents of the study were chosen from the members of the cooperative.
The manager, officers and staff of the cooperative were also interviewed. There were 50
respondents chosen at random.
Methods of Data Collection
Such respondent was given a questionnaire to fill up under the supervision of the
researcher. The manager and other key officers of the cooperative were interviewed to
provide other information that is important for the study.
Secondary data like annual reports and brochures of the cooperative was also
referred to.
Data Analysis
The accomplished questionnaires were tabulated and analyzed based on the
objectives of the study using frequency and percentages.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
12
RESULTS AND DISCUSSION
Profile of Respondents
The respondents were the member-borrowers of the PRO-COR-EMPUC
cooperative. Table 1 presents the age, sex, civil status and educational attainment of the
respondents.
Age. Majority (66%) of the respondents were between the age of 31-40 years old
followed by the age bracket of 20-30 years old with 22%, while the 40-50 yrs old were
the least in number with 12%.
Sex. Majority (68%) of the respondents are female and only 42% are male.
Civil status. Seventy (70%) of the respondents were married, while 30% were
single. This indicates that majority of the member-borrowers have families to support.
Educational attainment. Most (90%) of the respondents have gone to college, 4%
have finished secondary school while 6% acquired a vocational course. As such, it is
expected that members have better understanding on cooperative laws and policies.
Table 1. Respondent\\ profile
PARTICULAR
FREQUENCY
PERCENTAGE
Age
20 – 30
6
12
31 – 40
33
66
41 – 50
11
22
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
13
Table 1 continued
PARTICULAR
FREQUENCY
PERCENTAGE
Sex
Male
21
42
Female
29
58
TOTAL
50
100
Civil Status
Single
15
30
Married
35
70
TOTAL
Educational Attainment
Elementary
0
0
Secondary
2
4
College
45
90
Vocational
3
6
TOTAL
50
100
Types of Loan Availed by the Respondents
The respondents availed themselves of productive and providential loans. A
Providential loan is offered for multi-purpose uses such as education, medical or
hospitalization and other purposes. This type of loan is available to all members. On the
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
14
other hand, productive loan includes merchandising, sari-sari-store, dry goods entry and
other purposes.
Table 2 shows that most (98%) of the members availed themselves of the
providential loan composed of 68% educational loan, and 28% medical loan. The least
availed loan was the providential loan at and this was used for merchandising (4%).
This implies that most of the borrower’s availed themselves of the providential
loan.
Table 2. Types of loan availed by the respondents
TYPE OF LOAN
FREQUENCY
PERCENTAGE
Prudential
Educational
34
68
Medical
14
28
48
Productive
Merchandising
2
4
TOTAL
50
100
Requirements in Borrowing
As one of the lending institutions, the Police Regional Office Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC), also has requirements in
acquiring loans for security purposes in case the borrower cannot pay and it is a practice
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
15
and policy of the cooperative and for record purposes. For all loan types, a borrower
should submit a pay slip, authority to deduct from their salary, promissory note, project
proposal and deed of assignment of salary. Furthermore, all the cooperatives said that it
is necessary for all their borrowers to submit or accomplish all the requirements for loans
before getting their loans be approved and released. The findings is strengthened by the
findings of Labinio (2004), that the requirements in borrowing/loaning by member
borrowers were promissory note and farm business plan/project proposal and capital
share.
Table 3. Requirements in borrowing/loaning
REQUIREMENT
FREQUENCY
PERCENTAGE
Pay slip
39
78
Authority to deduct
4
92
Promissory note
43
86
Project proposal
2
4
Deed of assignment of salary
44
88
* multiple response
Maturity of Loans Chosen by the Borrowers.
Table 4 shows that 62 % of the respondents chose a maturity of two months,
while 26% chose a maturity of three months and the rest chose a maturity of one month.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
16
Table 4. Maturity of loans Chosen by the borrowers
MATURITY
FREQUENCY
PERCENTAGE
1 Month
6
12
2 months
31
62
3 months
13
26
Duration of Loan Processing
Table 5 shows the duration of loan processing as reported by the borrowers.
Majority (52%) of the respondents indicated one to two weeks, 28% of the respondents
indicated 3-4 weeks and 20% of the respondents indicated 2-3 days processing.
However, there are instances that loans are not released immediately, because of
unavailability of collection/funds especially if the amount being borrowed is big. The
borrower may take the 1-2 weeks of waiting before they could get their loan. The result
implies that the officers and credit committee acted immediately on loan applications and
met regularly, the only factor that delayed release of loan is availability of funds.
Table 5. Duration of loan processing
DURATION
FREQUENCY
PERCENTAGE
2-3 days
10
20
1-2 weeks
26
52
3-4 weeks
14
28
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
17
Perception of Respondents on Timeliness of Loan Released
Table 6 presents that 54% of the borrowers perceived that loans are released
immediately upon approval. On the other hand 46% of the borrowers responded that
loans are not released immediately for the reason that the funds are not available and the
credit committee have to meet first before approving loans.
Table 6. Perception of respondents on timeliness of loan released
PARTICULAR
FREQUENCY
PERCENTAGE
Loan are released immediately
27
54
Loans are not released immediately
23
46
TOTAL
50
100
Methods of Loan Release
Loans are released to borrowers either in full cash or installment (Table7).
Majority (62%) of the loan borrowers received the loan in full while, 38% received their
loan on installment. because they have to wait for the collections if there is no available
money. This finding is the same with the result of the study of Comising (2006) that
installment release of loan is practiced by the Kabayan Multipurpose Cooperative if
collection is not enough for the loan to be released. Terms of installment are based on the
availability of collection.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
18
Table 7. Methods of loan release
METHODS
FREQUENCY
PERCENTAGE
Full cash
31
62
Installment
19
38
TOTAL
50
100
Manner of Interest Payment
Table 8 shows that most (92%) of the borrowers paid their interest through
deduction from the loan borrowed and only 8% paid at maturity date. According to the
responses of member-borrowers payment of interest is just like loan repayment because
sometimes they meet also difficulty on the payment. Those who paid there interest
through deduction from loan borrowed on time have their loan interest already deducted.
While those who paid at maturity date paid in full cash together with there loan
borrowed.
Table 8. Manner of Interest Payment
PAYMENTS
FREQUENCY
PERCENTAGE
Pre-deducted
46
92
Paid upon maturity
4
8
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
19
Loan Repayment Practices
Table 9 shows the ways by which the borrowers pay their loans to the
cooperatives. Majority (64%) of the borrowers pay their loan through collector of the
cooperative, 36% of the borrowers pay their loans by going personally to the cooperative
office. Since there are only two collectors, the cooperative informed and requested their
borrowers to bring their payments to their office. Moreover, the cooperative is located
near the office of the members, thus, have no hard time in going to their cooperative.
Table 9. Loan repayment practices
PRACTICES
FREQUENCY
PERCENTAGE
Through collectors
32
64
Personally go to the cooperative
18
36
TOTAL
50
100
Terms of Installment
Table 10 showed that most majority (88%) paid their loan on installment basis.
However, there were 12% who paid their loan upon maturity. This means that most of
the members were paying their loans on installment basis. There were 88.6% who paid
on installment through semi-monthly or twice a month basis, only 11.4% paid on a
monthly basis. This indicates that some borrowers repaid their loan through installment
term as agreed with the cooperative.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
20
Table 10. Terms of payment
FREQUENCY
PERCENTAGE
Twice a month
39
88.6
Monthly
5
11.4
TOTAL
44
100
Reminder about Loans
Table 11 shows that majority (64%) of the respondents was reminded of their loan
or balances, While 36% mentioned that they were not reminded of their loan or balances.
The result implies that the cooperatives made their borrowers aware of their due date and
they give enough time for there borrowers to prepare their payments. Furthermore, the
respondents were reminded through letter (54%) and through phone call (46%). The
result implies that the officers utilized the formal way of reminding their borrowers
through reminder letter.
The result further implies that the cooperative made their borrowers aware of their
due date and they gave enough time for their borrowers to prepare their payments.
Table 11. Methods of reminder
FREQUENCY
PERCENTAGE
Letter
27
54
Phone call
23
46
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
21
Causes of Loan Delinquency
Table 12 – 14 shows that 72% of the respondents were able to pay their loan on
the maturity date and 28% were not able to pay their loan on time. Reasons for not
paying their loan on due date was because of unexpected family problem (31%),
commitments from other lending institutions (10%) and term is not enough (17%)
because the money was spent for other purposes before the collector came. Source of
funds for loan payment is from salaries (84%) and, borrow from others (4%). All the
respondents (100%) did not sell any property to repay their loan.
The aforementioned finding is similar to the findings of Macli-ing (2002) that the
failure of member to pay on time when the loan mature was due to unexpected family
problem and lack of cash on maturity. Furthermore, Pilas (2007) also found out in her
study that the money for payment was used for another purpose.
Since most of the respondents were employed so they depended only on their
salaries as their source for loan repayment.
Table 12. Numbers of respondent who paid loan on time and not on time
PARTICULAR
FREQUENCY PERCENTAGE
Paid loan on time
36
72
Did not pay loan on time
14
28
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
22
Table 13 Reason for not paying on time
REASONS
FREQUENCY PERCENTAGE
Unexpected family problem
31
62
Commitment with other lending institutions
10
20
Term is not enough because it is used for
17
34
other purposes before the collector came.
Table 14 Source of funds for repayment
FREQUENCY PERCENTAGE
Salaries
42
84
Borrow from others
2
4
No comment
6
12
TOTAL
50
100
Problems Encountered by Borrowers in Securing Loan
Table 15 presents the problems of the borrowers related to loan application, and
loan repayment.
Loan application. The table shows that 46% of the respondents commented on
the delayed approval of loan application, while 36% of the loan borrowers said that many
requirements to accomplish before loan was granted. Furthermore, 10% of the
respondents commented on the distance from the cooperative. Only 22% of the loan
borrowers said that they were unaware of the procedures in borrowing loans and 14%
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
23
said that there was limitations by the loanable fund available. Twenty four percent of the
loan borrowers commented on the installment release of loan which were inadequate to
meet the needs of the borrowers.
Loan repayment. Findings further showed that 28% of the borrowers mentioned
their inability to pay loan at maturity date. The reason for such inability was related to
loans due in other lending institutions as mentioned by 18 of the respondents. Other
reasons were due to financial constraints at the time of payment, which was identified by
26 of the respondents and 13 responded with due to bills such hospitalization and
education.
These findings supports the findings of Ganawed (1991) that the common
problems encountered by member-borrowers were long loan processing duration,
distance from the cooperative, and limited loan funds available. In addition, Macli-ing
(2002) also corroborated the finding that many requirements to accomplish is another
problems encountered by member-borrowers.
Table 15. Problems encountered by borrowers in securing loan
PROBLEMS
FREQUENCY PERCENTAGE
Loan application
Delayed processing and approval
23
46
Many requirements to accomplish
18
36
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
24
Distance from the cooperative
5
10
Unawareness on the procedures in borrowing
11
22
Limitation of funds available for loans
7
14
Installment released of loan to meet needs
12
24
Loan repayment
Many commitments from their lending institutions
18
36
Financial constraints at the time of repayment
26
52
Bills to pay i.e hospitalization, tuition fees
13
26
Alternative Measures to Improve Credit Repayment
Performance.
Table 16 shows the alternative measures to improve credit repayment
performance of loans. The respondents mentioned two factors to improve repayment
performance like education and proper management.
Education. One way to improve credit repayment performance of loan borrowers
is through education. Most (78%) of the respondents mentioned that there should be
continuous education of members, officers and staff, while 68% of the respondents
mentioned that they should conduct orientation and training to members, officers and
staff.
Management. A finding showed that management is important to improve credit
repayment performance is management. Seventy two percent (72%) of the respondents
said that the officers of the cooperative should post notice of activities in advance, while
42% suggested that they should engage themselves in the cooperative activities.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
25
Furthermore, 18% mentioned that the officers of the cooperative should mingle with the
members and only 1% of the respondents mentioned that the officers and members
should develop harmonious relationship. Moreover, they should respect and show good
manners with co-members as responded by one percent of the respondent. There was
22% who said that the officers should motivate members to patronize the cooperative and
in addition the officers should encourage active participation of members as suggested by
one percent of the respondents.
Table 16. Alternative measures to improve credit repayment performance
ALTERNATIVE MEASURES
FREQUENCY PERCENTAGE
Education
Continuous education of members, officers and
39
78
Staff
Conduct orientation and trainings to members,
34
68
officers and staff
Management
Advance notice on the activities of the
36
72
Cooperative
Engage self/participate in cooperative activities
21
42
Mingle with members,& officers of the
9
18
Cooperative
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
26
Table 16. continued
ALTERNATIVE MEASURES
FREQUENCY PERCENTAGE
Develop harmonious relationship between
5
1
officers and members
Respect and show good manners with co-
5
1
Members
Motivate members to patronize the cooperative
11
22
Encourage active participation of members
5
1
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
SUMMARY, CONCLUSION AND RECOMMENDATION
Summary
The study determined the profile of loan and repayment of borrowers of the PRO-
COR –EMPUC. The specific objectives of the study were to: 1) determine the profile of
the loans of members as to purpose of loaning, requirements in borrowing loans, maturity
of loans, duration of loan processing, methods of loans release. 2) determine the loan
repayment performance of the loan borrowers as to means of repayment, methods of
repayment, timeliness of repayment and sources of funds for repayment. 3) determine the
problems encountered by the borrowers in the following stages: loan application, loan
release and loan repayment. 4) determine the factors affecting loan delinquency 5)
determine some alternative measures to improve credit repayment performance of
borrowers of the Police Regional Officer- Cordillera Employees Multipurpose
Cooperative.
The research was conducted in La Trinidad, Benguet where the PRO-COR-
EMPUC is located. The office is located at Camp Bado Dangwa, La Trinidad, Benguet.
A survey questionnaire was distributed to some of its members and also the
manager of the Cooperative and data gathered was validated through personal interview
during the collection of the questionnaires. Respondents of the study were 50 cooperative
members and the manager. The data gathered were tabulated and analyzed with the aid of
frequencies and percentages.
The types of loan granted by the PRO-COR–EMPUC were productive loan and
Providential. The amount granted depended on the capacity of borrowers.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
26
The major requirements in granting loans were payslip, authority to deduct,
promissory note, project proposal and deed of assignment of salary. These requirements
were very important for security of the PRO-COR-EMPUC, which means that if the
borrowers failed to pay loans for a longer period of time with all the conditions given, the
collateral can be foreclosed and owned by the PRO-COR EMPUC. This is also a
traditional practice in lending operation.
For the terms of loan granted, the PRO-COR-EMPUC offered only short term
loan grants from one to 3 months.
As to release of loan, most of the borrowers immediately received their loan in
full cash upon approval.
For the payment of interest, most of the borrowers paid pre-deducted while the
other borrowers paid upon maturity.
The repayment of loan by the loan borrowers were through the PRO-COR-
EMPUC collector. Some borrowers paid their loans by going personally to the office of
the PRO-COR-EMPUC, while others paid their loan through a messenger. Most of the
borrowers were reminded of their balance when it is due through either letter or phone.
Regarding their repayment performance, most of the borrowers were able to pay
loans upon maturity. On the other hand, some were not able to pay because of reasons
like unexpected family problem, commitments with other lending institutions, and the
term is not enough because the loan was used for other purposes. The sources of funds by
loan borrowers were from there salaries as mentioned by most of the borrowers,
Moreover, the borrowers were not forced to sell any property to repay their loan.
The identified problems during loan application were long duration of loan
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
27
processing, delayed loan approval, many requirements to accomplish, distance of the
cooperative, unawareness of the procedures in borrowing, and limited money available
for lending.
The problems encountered with loan release were delay of loan and installment
release of loan, which is in adequate to meet the needs of borrowers.
As to loan repayment, borrowers who have loans due in other lending sources
have difficulty in coping with loans repayments. Some cannot pay due to financial
constraints at the time of payment, while some have to pay bills for hospitalization or
education.
Conclusions
1. Most borrowers use loan for education and medication. Very few borrow for
productive purposes or investment.
2. Requirements for loan processing are similar with other lending institutions.
An added requirement is authority to deduct from salary. Loans are generally
released with one to two weeks.
3. Most borrowers prefer two months payment of their loans on twice a month
basis.
4. Most borrowers of the PRO-COR-EMPUC paid their loan on time. Late
payers are generally those who have loans from other sources.
Recommendations
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
28
1. Members should be encourage to borrow for investment purposes.
2. Borrowers should be taught to spend money wisely according to its purpose
and make them aware the PRO-COR-EMPUC Policies.
3. With generally good loan repayments, the cooperative can focus its activities
on establishing close relations with member in order to improve services.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
LITERATURE CITED
ABASOLO, P.A., M.V. RUIZ and F.B. BERTOL. 1996. Cooperative Code of the
Philippines (copyright 1996) Primer Act on R.A.6938. P.20-24
ADB (1981). Benefits to the poor, annual report.
AGUSTIN, L.M. 2000. Perceived effects of training on the performance of cooperative in
Kibungan, Benguet. BS Thesis (Unpub.) BSU, La Trinidad, Benguet
ANONYMOUS, 2006. The ABC’s of Borrowing. November 26, 2006 . www.How to
device.com./borrowing.
BRAZIL, J.O. 2002. Attitudes of Baguio-Benguet Community Credit Cooperative
member-borrowers towards loan payment. BS Thesis. Benguet State University,
La Trinidad, Benguet. P. 27
CAWAON, J. W. (1982, Determination of Agriculture
Credit Requirements of Small Farmers in Pugo, La Union. BSU, La Trinidad
Benguet
Benguet. Unpublished Undergraduate Thesi0073
DAVID, K. 1990. Perception and Attitude of Baguio City and Benguet Province
Towards the Cordillera Autonomy. A Development Perspective.M.S. Thesis
Benguet State University. P.23-24
DEQUIT, F.J. 2003. Attitudes of members of selected cooperatives in La Trinidad
towards borrowing and repaying loans. BS Thesis. Benguet State University, La
Trinidad, Benguet. P. 23.
DUMAGAT, C. 1977. Cooperative New International, New Delhi. P 541 – 542
GANAWED, D.R. 1997. Credit and repayment performance of loan borrowers of
Cooperative Bank of Benguet. Bs Thesis. Benguet State University, La Trinidad,
Benguet. P. 24.
PIMENTEL, A. Jr. and M.R. CUA. 1994. Cooperative Code of the Philippines
(Theory, Law and Practice with CDA Memorandum Circular 1992-1999) Gold
Loop Towers, Amber, Metro Manila, Philippines. P. 160.
SACAY, O.J., et. al. 1995. Small Farmer’s Credit Dilemma. National Publishing Corp.
Manila, Philippines. P. 48.
SINGH, I. J. 1997. Elements of Farm Management Economics. New Delhi: Affiliated
East-West Press Private Ltd. P. 76.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
26
SUPANGA, M.P. 2002. Implementation of loan policies of Philex Employees Credit
Cooperative in Philex, Pacdal, Tuba, Benguet. A Baby Thesis. Easter Colleges
Inc. Baguio City. P.11
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
Republic of the Philippines
Benguet State University
College of Agriculture
La Trinidad, Benguet
DEPARTMENT OF AGRICULTURE ECONOMICS
AND AGRIBUSINESS MANAGEMENT
February 20, 2007
Mr. Felix A. Juguilon
Cooperative Manager
Police Regional Office-Cordillera
Employees Multipurpose Cooperative
Camp Bado Dangwa, La Trinidad, Benguet
Dear Sir;
Warm greetings!
I am a fourth year student taking up Bachelor of Science in Agribusiness Major in
Cooperative Management at Benguet State University. To fulfill my field of study, I am
tasked to conduct a research entitled “Profile of Loan and Repayment of Borrower in
PRO-COR-EMPUC”.
In this regards, may I request information about your cooperative such as the history of
the cooperative and the list of names of the members/borrowers. I appreciate it very much
if you furnish me the necessary information that I will need.
Thank you very much and God bless.
Respectfully yours,
Charlene T. Molchino
Student Researcher
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
29
SURVEY QUESTIONNAIRE
I. General Information
Name (optional) _______________________________________________________
Address ______________________________________________________________
Age: __________ Sex______________ Civil status ________________________
Highest educational attainment
________Elementary
________ Post College
________Secondary
________Vocational
________College
________Others (specify) ______________
II. Profile of Latest Loan
A. Type of loan
_______ Productive: _______Educational
_______Medical
________Providential; _______ Merchandizing
_______ Dry goods entry
_______Sari-sari store
_______Others, specify ____________________________
1. Purpose of loaning (answer according to type of loan borrowed).
a. Productive
_________ Education
_________ Medical
_________ Capital for business
_________ Others, specify ________________________________
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
30
b. Commercial
_________ Sari-sari store
_________ Dry goods entry
__________ Others, specify ____________________________
2. Requirements to be submitted before borrowing loan (pls. check)
__________ Cedula/Community tax certificate
__________ TIN ( Tax Identification No.)
__________ Promissory note
__________ Project proposal
__________ Others, specify ________________________________
3. What is the maturity of the loan you acquired? (pls. check)
_________ Six months but not over 18 months
_________ Over six months but not over 18 months
_________ Others, specify _________________________________
4. How many days/weeks/months you have been processing loan before it was
released? ______________________________________________
a. Are approved loan released immediately?
_______ Yes
_______ No
If no, why?
________ Funds are not available
________The credit committees have to meet first before approving loans.
________Others, specify _____________________________
5. Methods of loan release
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
31
________ Full cash
________ Installment
________ Others, specify ______________________________
6. How is the interest being paid?
________ Deduction from the loan borrowed
________ Paid of maturity
________ Others, specify ________________________________
7. How much is the amount of your latest loan? _______________________
B. Repayment of Loans
1. How do you pay?
________ Through collector
________ Personally go to the coop for payment
________Sending through messenger
________ Others, specify ____________________________________
2. Methods of repayment.
________ Full cash
________ Installment, How many terms? ______________________
________ Others, specify ___________________________________
3. If installment, how?
________ Weekly
________ Monthly
________ Quarterly
________ Annually
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
32
________ Others, specify ______________________________________
a. Before the loan is due, were you reminded of your loan balance by the coop?
_________ Yes
________ No
If yes, how?
_______ Letters
_______ Contact
_______ Others, specify ______________________________________
b. Were you able to repay the loan on maturity date?
________ Yes
________ No
Why?
b.1. _________________________________________________
b.2. _________________________________________________
b.3 __________________________________________________
4. In case the loan is repaid, where did you get the funds for repayment?
________ Salaries
________ Borrowing from others
________ Others, specify ___________________________________
a. Were you forced to sell any valuable property to repay tour loan?
________ Yes
________ No
If yes, what property? (Identify) _________________________________
___________________________________________________________
C. Problem Encountered
1. Loan application
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
33
_______ Delayed processing and approval
________ Many requirements to accomplish
________ Distance from the coop.
________ Unawareness of the procedures in borrowing
________ Limitations on the loanable funds available
_______ Installment release of loan which is inadequate to meet the needs
of borrower
________ Others, specify ___________________________________
Suggestions/recommendations: _____________________________________
_______________________________________________________________
2.Loan repayment
________ Difficulty/inability to repay the loan at maturity date due to:
( ) Wrong timing of collection by the collectors
( ) Diversion of loans to other purposes
( ) Lack of incentives for borrower to repay on time
( ) Others, specify ______________________________________
Suggestions/recommendations: _____________________________________
_________________________________________________________________
D. Alternative Measure to Improve Credit Repayment Performance of Loans.
1. Education
( ) Continuous education of members, officers and staff.
( ) Conduct orientation and trainings to members, officers and staff
( ) Others, specify ___________________________________________
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
34
2. Management
( ) Early notice on the activities of the cooperative
( ) engage yourself in cooperative activities
( ) mingle with members, officers of the cooperative
( ) develop harmonious relationship between officers and members
( ) respect and show good manners with co-members
( ) motivate members to patronize the cooperative
( ) encourage active participation of members
( ) Others, specify _________________________________________
Suggestions/recommendations __________________________________
THANK YOU VERY MUCH.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
MOLCHINO, CHARLENE T. APRIL 2008. Profile of Loan and Repayment of
Borrower in Police Regional Office – Cordillera Employees Multipurpose Cooperative
(PRO-COR-EMPUC) in Camp Bado Dangwa, La Trinidad, Benguet. Benguet State
University, La Trinidad Benguet.
Adviser: Marie Klondy T. Dagupen, PhD
ABSTRACT
This study was conducted in Camp Bado Dangwa, La Trinidad, Benguet in July
2007 to determine the profile of the loans of members of the PRO-COR-EMPUC, the
loan repayment performance of the loan borrowers, the problem encountered by the
borrowers, causes of loan delinquency and to determine some alternative measure to
improve credit repayment performance of loan borrowers to PRO-COR-EMPUC.
The sources of data in the study were 50 respondents who were chosen at random.
The data were gathered through survey questionnaire.
Majority of the respondents were females, married and had reached college
education. The community availed loans were the providential for child educational and
for medical. A borrower should submit to the before one could avail of the loan.
Requirements include pay slip, authority to cooperative requirements deduct, promissory
note, project proposal and deed of assignment of salary.
The PRO-COR-EMPUC offered only short term loan grants from one to three
months.
The credit committee approves the loan and loan were release upon approval if
funds are available. For the payment of interest most of the borrowers pre-deduct from
the loan borrowed while the other borrower paid upon maturity.
The repayment of loan by the loan borrowers were through the PRO-COR-
EMPUC collector or pay personally to the cooperative. Most of the borrowers were
reminded of their balance when it is due through either letter or phone. Seventy two
percent of the respondents were able to pay their loan on the due date and the source of
funds by the loan borrowers were from their salaries.
The identified problems during loan application were long duration of loan
processing, delayed loan approval, many requirements to accomplish, distance of the
Cooperative, unawareness of the procedures in borrowing, and limited money available
for lending, as for loan release were delayed of repayment, borrowers cannot pay due to
financial constraints and some have to pay bills for hospitalization or education.
Factors affecting loan delinquency like unexpected family problem, commitments
with other lending institutions and the term is not enough.
The cooperatives should still find ways to improve their management practices,
operations and policy implementation. Continues education not only the officers but also
to the members should be done.
ii
TABLE OF CONTENTS
Page
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
INTRODUCTION
Rationale of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Statement of the Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Objectives of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Significance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
REVIEW OF LITERATURE
Nature of the Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Purpose of Member in Availing Loan . . . . . . . . . . . . . . . . . . . . . . .
5
Repayment Capacity of Borrowers . . . . . . . . . . . . . . . . . . . . . . . . .
6
Problems Encountered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Reasons of Loan Repayment Delinquency . . . . . . . . . . . . . . . . . . .
7
Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
METHODOLOGY
Locale and Time of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Respondents of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Methods of Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
RESULTS AND DISCUSSION
Profile of Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
iii
Types of Loan Availed by the Respondents . . . . . . . . . . . . . . . . . . .
12
Requirements in Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Maturity of Loans by chosen the Borrowers . . . . . . . . . . . . . . . . . .
14
Duration of Loan Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Perception of Respondents on Timeliness
of Loan Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Methods of Loan Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Manner of Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Loan Repayment Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
Terms of Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Reminder about Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Causes of Loan Delinquency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Problems Encountered by Borrowers in
Securing Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Alternative Measures to Improve Credit
Repayment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
SUMMARY, CONCLUSION AND RECOMMENDATION
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
LITERATURED CITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30
APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Letter to the Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
SURVEY QUESTIONNAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
iv
INTRODUCTION
Rationale of the Study
The Philippine National Police Regional Office Cordillera Employees
Multipurpose Cooperative (PRO-COR-EMPUC) was established through the initiative of
the Officer of the Director for personnel and Records Management (ODPRM), National
Headquarters by virtue of a Memorandum dated February 28, 2001.
PRO-COR-EMPUC started the concept of lending through Paluwagan system,
after the formulation of the Constitution and by-laws. Out of the 31 incorporators, nine
(9) members paid-up share capital of Php 500, a total of Php 4,500. From July to
February 2007, membership increased to 343 members and the membership share capital
increased to Php 811,964.04.
PRO-COR-EMPUC was duly registered with the Cooperative Development
Authority (CDA) on June 29, 2001, under Republic Act 6933. The members of the
cooperative are the Police Non-Commission Office (PNCO), Police Commission Office
(PCO) and Non-Uniform Office (NUP), retired personnel and their dependents.
The purposes of organizing the PRO-COR-EMPUC were to encourage thrift and
savings mobilization among its members, capital formation, to provide loans at
reasonable cost to its members, to provide related services for the members, for self
governance and to improve socio and economic status of members.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
2
Statement of the Problem
The study sought answer to the following questions:
1. What is the profile of the loans of members of the PNP Regional Office
Cordillera Employees Multipurpose Cooperative (PRO-COR-EMPUC) as to:
a. Purpose of loaning
b. Requirements in borrowing loans
c. Maturity of loan
d. Duration of loan processing
e. Methods of loan release
f. Interest of loan
g. Amount of loan
2. How do borrowers repay their loans as to:
a. Means of repayment
b. Methods of repayment
c. Timelines of repayment
d. Sources of funds for repayment
3. What are the problems encountered by the borrowers in the following stages:
a. Loan application
b. Loan released
c. Loan repayment
4. What are the factors affecting loan delinquency?
5. What are the alternative measure to improve credit repayment performance.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
3
Objectives of the Study
The study aimed to:
1. Determine the profile of the loans of members of the PNP Regional Office
Cordillera Employees Multi-purpose Cooperative (PRO-COR-EMPUC)
Cooperative as to:
a. Purpose of loaning
b. Requirements in borrowing loans
c. Maturity of loan
d. Duration of loan processing
e. Methods of loan release
f. Interest of loan
g. Amount of loan
2. Determine the loan repayment performance of the loan borrowers as to:
a. Means of repayment
b. Methods of repayment
c. Timeliness of repayment
d. Sources of funds for repayment
3. Determine the problems encountered by the borrowers in the following stages:
a. Loan application
b. Loan released
c. Loan repayment
4. Determine the factors affecting loan delinquency.
5. Determine the alternative measures to improve credit repayment performance.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
4
Importance of the Study
The findings of the study is hoped to serve as reference for the PRO-COR-
EMPUC and its borrowers to improve credit operations and lending practices and also for
different credit institutions.
Likewise, this study is hoped to serve as reference for students of economics,
extension and agribusiness who may be interested in conducting similar studies.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
REVIEW OF LITERATURE
Nature of the Cooperative
The Cooperative Code of the Philippines (1990), states that cooperative is a duly
registered association of persons, with 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 ad accepting a fair share of the risk and benefit of the
undertaking in accordance with the universally accepted cooperative principles (Pimentel,
and Cua, 1994).
Purpose of Member in Availing Loan
The purpose of money is to facilitate the transfer of value over space and time. In
other words, we use it to exchange wealth geographically, and to provide for future
payment. Without money, which is in effect an intermediate good used for trading, it
would become very difficult to have a division of labor, i.e., specialization, and
everyone’s standard of living would suffer.
Some small businesspersons cannot understand why a lending institution refused
to lend them money. Others have no trouble getting funds, but they are surprised to find
strings attached to their loans. Such owner managers fails to realize that banks and other
lenders have to operate by certain principles just like other types of business
(www.How.to device.com./borrowers, 2006).
The ADB (1987), stated that granting loans and financing projects of the banks
aimed at improving the facilities, education, and improve physical amenities; they added
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
6
that higher productivity and higher incomes for small farmers and landless peasants are
among the anticipated benefits from loans.
Likewise, the commercial borrowers use loans to finance their commercial
business such as sari-sari store, restaurant /eatery, vegetable trading, dry goods stall, shoe
repair shop, auto repair shop and other commercial activities.
Repayment Capacity of Borrowers
Repayment capacity is the major basis in the determination of the amount of loan
granted. These represent the person’s ability to use and manage credit wisely as
measured by the stable and reasonable amount of profit (Dumagat, 1977).
Singh (1977), further stated that the repayment capacity is a test of economic
feasibility if the loan can be repaid without difficulty.
It is generally attained if an investment is profitable. The poor repayment ability
of a farmer maybe due to the following:
a. Small size of farm business which gives a small income
b. Low production due to poor land
c. Low prices of farm products, distress sales and low infrastructure
d. High production cost
e. Diversion of loans for importation purpose and high cost of living.
Furthermore, Sacay (1985) cited that the factors affecting repayment but were
outside the control of the program participants included calamities, small size and low
market price, they added that findings in the impact.
Agustin (2000), found out in her study that majority of his respondents said that
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
7
training decreases delinquency rate while the rest of the respondents said that training did
not bring down delinquency rate. However, those 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 a member and
became aware of their benefits from the cooperative.
This implies that most members of both types of cooperatives have understood the
advantages of paying their loans at maturity date.
Problems Encountered
According to Dequit (2003), in the loaning process, people in the rural areas
hardly have any access to institutionalize credit facilities to reasonable term. The cover
risk of loans practically deprives the small farmers of the services of the usual credit
system.
David (1990) offered some guidelines to loaners, this include: a) devising a
supervision of credit to fit the needs of the farmers, and b) guidance of farmers from farm
production to marketing of products by bank technicians.
Reasons for Loan Repayment Delinquency
Based on the study of Ganawed (1997) and Cawaon (1982) loan delinquency was
due to high cost of production, low production output, low market price of crops and
money was used for other purposes. Ganawed further mentioned that in her study on the
Cooperative Bank of Benguet, she found out that the most contributory factor to non-
repayment of farmer borrower was the diversion of loaned amount to non-farm expenses
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
8
like food, building or repair/improvement of a house and recreation.
Brazil (2002), stated that most farmers are incapable of paying their loans for the
reason that there is low rate of production, lack of market and low level of capacity
among members. The study found out that this was due to improper farm management,
which means that the farmers did not use high yielding seeds, did not follow the required
fertilizer and lack of irrigation facilities.
The low repayment of borrowers was attributed to the low department repayment
capacity of the farmers due to unfavorable farm credit business and poor administration
with the failure of the credit function, the marketing operation also suffered delinquent
borrowers did not deliver their crops to there FACOMA’S, and the volume of marketing
business declined as the clientele was limited to non-delinquent borrowers and non-
borrowers. Many FACOMA’S were found to be loosely organized and financially
incapable of assuming the risks associated with the loaning operations and unfavorable
external competition ( Abasolo et. al, 1996).
Supanga (2002) further enumerated the common causes of ,loan delinquency as
irrelevance of loan policies, irresponsible processing system, weak collector system, lack
of security on loans, poor example of officer, several loans and lack of cooperative
education.
Definition of Terms
Loan – borrowed money or goods from the cooperative where a certain interest is added
Profile- background information about the respondents and cooperative
Maturity date – the date when the full loan is due to be paid.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
9
Delinquent loan – loan where the borrower is late in paying the loan.
Default loan – one where the borrower cannot or will not repay at all
Loan Repayment- it is a extinguishing liabilities
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
METHODOLOGY
Locale and Time of the Study
The study was conducted at the PNP PRO-COR-EMPUC located in Camp Bado
Dangwa , La Trinindad, Benguet from April 2007 to May 2007.
Respondents of the Study
The respondents of the study were chosen from the members of the cooperative.
The manager, officers and staff of the cooperative were also interviewed. There were 50
respondents chosen at random.
Methods of Data Collection
Such respondent was given a questionnaire to fill up under the supervision of the
researcher. The manager and other key officers of the cooperative were interviewed to
provide other information that is important for the study.
Secondary data like annual reports and brochures of the cooperative was also
referred to.
Data Analysis
The accomplished questionnaires were tabulated and analyzed based on the
objectives of the study using frequency and percentages.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
12
RESULTS AND DISCUSSION
Profile of Respondents
The respondents were the member-borrowers of the PRO-COR-EMPUC
cooperative. Table 1 presents the age, sex, civil status and educational attainment of the
respondents.
Age. Majority (66%) of the respondents were between the age of 31-40 years old
followed by the age bracket of 20-30 years old with 22%, while the 40-50 yrs old were
the least in number with 12%.
Sex. Majority (68%) of the respondents are female and only 42% are male.
Civil status. Seventy (70%) of the respondents were married, while 30% were
single. This indicates that majority of the member-borrowers have families to support.
Educational attainment. Most (90%) of the respondents have gone to college, 4%
have finished secondary school while 6% acquired a vocational course. As such, it is
expected that members have better understanding on cooperative laws and policies.
Table 1. Respondent\\ profile
PARTICULAR
FREQUENCY
PERCENTAGE
Age
20 – 30
6
12
31 – 40
33
66
41 – 50
11
22
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
13
Table 1 continued
PARTICULAR
FREQUENCY
PERCENTAGE
Sex
Male
21
42
Female
29
58
TOTAL
50
100
Civil Status
Single
15
30
Married
35
70
TOTAL
Educational Attainment
Elementary
0
0
Secondary
2
4
College
45
90
Vocational
3
6
TOTAL
50
100
Types of Loan Availed by the Respondents
The respondents availed themselves of productive and providential loans. A
Providential loan is offered for multi-purpose uses such as education, medical or
hospitalization and other purposes. This type of loan is available to all members. On the
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
14
other hand, productive loan includes merchandising, sari-sari-store, dry goods entry and
other purposes.
Table 2 shows that most (98%) of the members availed themselves of the
providential loan composed of 68% educational loan, and 28% medical loan. The least
availed loan was the providential loan at and this was used for merchandising (4%).
This implies that most of the borrower’s availed themselves of the providential
loan.
Table 2. Types of loan availed by the respondents
TYPE OF LOAN
FREQUENCY
PERCENTAGE
Prudential
Educational
34
68
Medical
14
28
48
Productive
Merchandising
2
4
TOTAL
50
100
Requirements in Borrowing
As one of the lending institutions, the Police Regional Office Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC), also has requirements in
acquiring loans for security purposes in case the borrower cannot pay and it is a practice
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
15
and policy of the cooperative and for record purposes. For all loan types, a borrower
should submit a pay slip, authority to deduct from their salary, promissory note, project
proposal and deed of assignment of salary. Furthermore, all the cooperatives said that it
is necessary for all their borrowers to submit or accomplish all the requirements for loans
before getting their loans be approved and released. The findings is strengthened by the
findings of Labinio (2004), that the requirements in borrowing/loaning by member
borrowers were promissory note and farm business plan/project proposal and capital
share.
Table 3. Requirements in borrowing/loaning
REQUIREMENT
FREQUENCY
PERCENTAGE
Pay slip
39
78
Authority to deduct
4
92
Promissory note
43
86
Project proposal
2
4
Deed of assignment of salary
44
88
* multiple response
Maturity of Loans Chosen by the Borrowers.
Table 4 shows that 62 % of the respondents chose a maturity of two months,
while 26% chose a maturity of three months and the rest chose a maturity of one month.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
16
Table 4. Maturity of loans Chosen by the borrowers
MATURITY
FREQUENCY
PERCENTAGE
1 Month
6
12
2 months
31
62
3 months
13
26
Duration of Loan Processing
Table 5 shows the duration of loan processing as reported by the borrowers.
Majority (52%) of the respondents indicated one to two weeks, 28% of the respondents
indicated 3-4 weeks and 20% of the respondents indicated 2-3 days processing.
However, there are instances that loans are not released immediately, because of
unavailability of collection/funds especially if the amount being borrowed is big. The
borrower may take the 1-2 weeks of waiting before they could get their loan. The result
implies that the officers and credit committee acted immediately on loan applications and
met regularly, the only factor that delayed release of loan is availability of funds.
Table 5. Duration of loan processing
DURATION
FREQUENCY
PERCENTAGE
2-3 days
10
20
1-2 weeks
26
52
3-4 weeks
14
28
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
17
Perception of Respondents on Timeliness of Loan Released
Table 6 presents that 54% of the borrowers perceived that loans are released
immediately upon approval. On the other hand 46% of the borrowers responded that
loans are not released immediately for the reason that the funds are not available and the
credit committee have to meet first before approving loans.
Table 6. Perception of respondents on timeliness of loan released
PARTICULAR
FREQUENCY
PERCENTAGE
Loan are released immediately
27
54
Loans are not released immediately
23
46
TOTAL
50
100
Methods of Loan Release
Loans are released to borrowers either in full cash or installment (Table7).
Majority (62%) of the loan borrowers received the loan in full while, 38% received their
loan on installment. because they have to wait for the collections if there is no available
money. This finding is the same with the result of the study of Comising (2006) that
installment release of loan is practiced by the Kabayan Multipurpose Cooperative if
collection is not enough for the loan to be released. Terms of installment are based on the
availability of collection.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
18
Table 7. Methods of loan release
METHODS
FREQUENCY
PERCENTAGE
Full cash
31
62
Installment
19
38
TOTAL
50
100
Manner of Interest Payment
Table 8 shows that most (92%) of the borrowers paid their interest through
deduction from the loan borrowed and only 8% paid at maturity date. According to the
responses of member-borrowers payment of interest is just like loan repayment because
sometimes they meet also difficulty on the payment. Those who paid there interest
through deduction from loan borrowed on time have their loan interest already deducted.
While those who paid at maturity date paid in full cash together with there loan
borrowed.
Table 8. Manner of Interest Payment
PAYMENTS
FREQUENCY
PERCENTAGE
Pre-deducted
46
92
Paid upon maturity
4
8
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
19
Loan Repayment Practices
Table 9 shows the ways by which the borrowers pay their loans to the
cooperatives. Majority (64%) of the borrowers pay their loan through collector of the
cooperative, 36% of the borrowers pay their loans by going personally to the cooperative
office. Since there are only two collectors, the cooperative informed and requested their
borrowers to bring their payments to their office. Moreover, the cooperative is located
near the office of the members, thus, have no hard time in going to their cooperative.
Table 9. Loan repayment practices
PRACTICES
FREQUENCY
PERCENTAGE
Through collectors
32
64
Personally go to the cooperative
18
36
TOTAL
50
100
Terms of Installment
Table 10 showed that most majority (88%) paid their loan on installment basis.
However, there were 12% who paid their loan upon maturity. This means that most of
the members were paying their loans on installment basis. There were 88.6% who paid
on installment through semi-monthly or twice a month basis, only 11.4% paid on a
monthly basis. This indicates that some borrowers repaid their loan through installment
term as agreed with the cooperative.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
20
Table 10. Terms of payment
FREQUENCY
PERCENTAGE
Twice a month
39
88.6
Monthly
5
11.4
TOTAL
44
100
Reminder about Loans
Table 11 shows that majority (64%) of the respondents was reminded of their loan
or balances, While 36% mentioned that they were not reminded of their loan or balances.
The result implies that the cooperatives made their borrowers aware of their due date and
they give enough time for there borrowers to prepare their payments. Furthermore, the
respondents were reminded through letter (54%) and through phone call (46%). The
result implies that the officers utilized the formal way of reminding their borrowers
through reminder letter.
The result further implies that the cooperative made their borrowers aware of their
due date and they gave enough time for their borrowers to prepare their payments.
Table 11. Methods of reminder
FREQUENCY
PERCENTAGE
Letter
27
54
Phone call
23
46
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
21
Causes of Loan Delinquency
Table 12 – 14 shows that 72% of the respondents were able to pay their loan on
the maturity date and 28% were not able to pay their loan on time. Reasons for not
paying their loan on due date was because of unexpected family problem (31%),
commitments from other lending institutions (10%) and term is not enough (17%)
because the money was spent for other purposes before the collector came. Source of
funds for loan payment is from salaries (84%) and, borrow from others (4%). All the
respondents (100%) did not sell any property to repay their loan.
The aforementioned finding is similar to the findings of Macli-ing (2002) that the
failure of member to pay on time when the loan mature was due to unexpected family
problem and lack of cash on maturity. Furthermore, Pilas (2007) also found out in her
study that the money for payment was used for another purpose.
Since most of the respondents were employed so they depended only on their
salaries as their source for loan repayment.
Table 12. Numbers of respondent who paid loan on time and not on time
PARTICULAR
FREQUENCY PERCENTAGE
Paid loan on time
36
72
Did not pay loan on time
14
28
TOTAL
50
100
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
22
Table 13 Reason for not paying on time
REASONS
FREQUENCY PERCENTAGE
Unexpected family problem
31
62
Commitment with other lending institutions
10
20
Term is not enough because it is used for
17
34
other purposes before the collector came.
Table 14 Source of funds for repayment
FREQUENCY PERCENTAGE
Salaries
42
84
Borrow from others
2
4
No comment
6
12
TOTAL
50
100
Problems Encountered by Borrowers in Securing Loan
Table 15 presents the problems of the borrowers related to loan application, and
loan repayment.
Loan application. The table shows that 46% of the respondents commented on
the delayed approval of loan application, while 36% of the loan borrowers said that many
requirements to accomplish before loan was granted. Furthermore, 10% of the
respondents commented on the distance from the cooperative. Only 22% of the loan
borrowers said that they were unaware of the procedures in borrowing loans and 14%
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
23
said that there was limitations by the loanable fund available. Twenty four percent of the
loan borrowers commented on the installment release of loan which were inadequate to
meet the needs of the borrowers.
Loan repayment. Findings further showed that 28% of the borrowers mentioned
their inability to pay loan at maturity date. The reason for such inability was related to
loans due in other lending institutions as mentioned by 18 of the respondents. Other
reasons were due to financial constraints at the time of payment, which was identified by
26 of the respondents and 13 responded with due to bills such hospitalization and
education.
These findings supports the findings of Ganawed (1991) that the common
problems encountered by member-borrowers were long loan processing duration,
distance from the cooperative, and limited loan funds available. In addition, Macli-ing
(2002) also corroborated the finding that many requirements to accomplish is another
problems encountered by member-borrowers.
Table 15. Problems encountered by borrowers in securing loan
PROBLEMS
FREQUENCY PERCENTAGE
Loan application
Delayed processing and approval
23
46
Many requirements to accomplish
18
36
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
24
Distance from the cooperative
5
10
Unawareness on the procedures in borrowing
11
22
Limitation of funds available for loans
7
14
Installment released of loan to meet needs
12
24
Loan repayment
Many commitments from their lending institutions
18
36
Financial constraints at the time of repayment
26
52
Bills to pay i.e hospitalization, tuition fees
13
26
Alternative Measures to Improve Credit Repayment
Performance.
Table 16 shows the alternative measures to improve credit repayment
performance of loans. The respondents mentioned two factors to improve repayment
performance like education and proper management.
Education. One way to improve credit repayment performance of loan borrowers
is through education. Most (78%) of the respondents mentioned that there should be
continuous education of members, officers and staff, while 68% of the respondents
mentioned that they should conduct orientation and training to members, officers and
staff.
Management. A finding showed that management is important to improve credit
repayment performance is management. Seventy two percent (72%) of the respondents
said that the officers of the cooperative should post notice of activities in advance, while
42% suggested that they should engage themselves in the cooperative activities.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
25
Furthermore, 18% mentioned that the officers of the cooperative should mingle with the
members and only 1% of the respondents mentioned that the officers and members
should develop harmonious relationship. Moreover, they should respect and show good
manners with co-members as responded by one percent of the respondent. There was
22% who said that the officers should motivate members to patronize the cooperative and
in addition the officers should encourage active participation of members as suggested by
one percent of the respondents.
Table 16. Alternative measures to improve credit repayment performance
ALTERNATIVE MEASURES
FREQUENCY PERCENTAGE
Education
Continuous education of members, officers and
39
78
Staff
Conduct orientation and trainings to members,
34
68
officers and staff
Management
Advance notice on the activities of the
36
72
Cooperative
Engage self/participate in cooperative activities
21
42
Mingle with members,& officers of the
9
18
Cooperative
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
26
Table 16. continued
ALTERNATIVE MEASURES
FREQUENCY PERCENTAGE
Develop harmonious relationship between
5
1
officers and members
Respect and show good manners with co-
5
1
Members
Motivate members to patronize the cooperative
11
22
Encourage active participation of members
5
1
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
SUMMARY, CONCLUSION AND RECOMMENDATION
Summary
The study determined the profile of loan and repayment of borrowers of the PRO-
COR –EMPUC. The specific objectives of the study were to: 1) determine the profile of
the loans of members as to purpose of loaning, requirements in borrowing loans, maturity
of loans, duration of loan processing, methods of loans release. 2) determine the loan
repayment performance of the loan borrowers as to means of repayment, methods of
repayment, timeliness of repayment and sources of funds for repayment. 3) determine the
problems encountered by the borrowers in the following stages: loan application, loan
release and loan repayment. 4) determine the factors affecting loan delinquency 5)
determine some alternative measures to improve credit repayment performance of
borrowers of the Police Regional Officer- Cordillera Employees Multipurpose
Cooperative.
The research was conducted in La Trinidad, Benguet where the PRO-COR-
EMPUC is located. The office is located at Camp Bado Dangwa, La Trinidad, Benguet.
A survey questionnaire was distributed to some of its members and also the
manager of the Cooperative and data gathered was validated through personal interview
during the collection of the questionnaires. Respondents of the study were 50 cooperative
members and the manager. The data gathered were tabulated and analyzed with the aid of
frequencies and percentages.
The types of loan granted by the PRO-COR–EMPUC were productive loan and
Providential. The amount granted depended on the capacity of borrowers.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
26
The major requirements in granting loans were payslip, authority to deduct,
promissory note, project proposal and deed of assignment of salary. These requirements
were very important for security of the PRO-COR-EMPUC, which means that if the
borrowers failed to pay loans for a longer period of time with all the conditions given, the
collateral can be foreclosed and owned by the PRO-COR EMPUC. This is also a
traditional practice in lending operation.
For the terms of loan granted, the PRO-COR-EMPUC offered only short term
loan grants from one to 3 months.
As to release of loan, most of the borrowers immediately received their loan in
full cash upon approval.
For the payment of interest, most of the borrowers paid pre-deducted while the
other borrowers paid upon maturity.
The repayment of loan by the loan borrowers were through the PRO-COR-
EMPUC collector. Some borrowers paid their loans by going personally to the office of
the PRO-COR-EMPUC, while others paid their loan through a messenger. Most of the
borrowers were reminded of their balance when it is due through either letter or phone.
Regarding their repayment performance, most of the borrowers were able to pay
loans upon maturity. On the other hand, some were not able to pay because of reasons
like unexpected family problem, commitments with other lending institutions, and the
term is not enough because the loan was used for other purposes. The sources of funds by
loan borrowers were from there salaries as mentioned by most of the borrowers,
Moreover, the borrowers were not forced to sell any property to repay their loan.
The identified problems during loan application were long duration of loan
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
27
processing, delayed loan approval, many requirements to accomplish, distance of the
cooperative, unawareness of the procedures in borrowing, and limited money available
for lending.
The problems encountered with loan release were delay of loan and installment
release of loan, which is in adequate to meet the needs of borrowers.
As to loan repayment, borrowers who have loans due in other lending sources
have difficulty in coping with loans repayments. Some cannot pay due to financial
constraints at the time of payment, while some have to pay bills for hospitalization or
education.
Conclusions
1. Most borrowers use loan for education and medication. Very few borrow for
productive purposes or investment.
2. Requirements for loan processing are similar with other lending institutions.
An added requirement is authority to deduct from salary. Loans are generally
released with one to two weeks.
3. Most borrowers prefer two months payment of their loans on twice a month
basis.
4. Most borrowers of the PRO-COR-EMPUC paid their loan on time. Late
payers are generally those who have loans from other sources.
Recommendations
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
28
1. Members should be encourage to borrow for investment purposes.
2. Borrowers should be taught to spend money wisely according to its purpose
and make them aware the PRO-COR-EMPUC Policies.
3. With generally good loan repayments, the cooperative can focus its activities
on establishing close relations with member in order to improve services.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
LITERATURE CITED
ABASOLO, P.A., M.V. RUIZ and F.B. BERTOL. 1996. Cooperative Code of the
Philippines (copyright 1996) Primer Act on R.A.6938. P.20-24
ADB (1981). Benefits to the poor, annual report.
AGUSTIN, L.M. 2000. Perceived effects of training on the performance of cooperative in
Kibungan, Benguet. BS Thesis (Unpub.) BSU, La Trinidad, Benguet
ANONYMOUS, 2006. The ABC’s of Borrowing. November 26, 2006 . www.How to
device.com./borrowing.
BRAZIL, J.O. 2002. Attitudes of Baguio-Benguet Community Credit Cooperative
member-borrowers towards loan payment. BS Thesis. Benguet State University,
La Trinidad, Benguet. P. 27
CAWAON, J. W. (1982, Determination of Agriculture
Credit Requirements of Small Farmers in Pugo, La Union. BSU, La Trinidad
Benguet
Benguet. Unpublished Undergraduate Thesi0073
DAVID, K. 1990. Perception and Attitude of Baguio City and Benguet Province
Towards the Cordillera Autonomy. A Development Perspective.M.S. Thesis
Benguet State University. P.23-24
DEQUIT, F.J. 2003. Attitudes of members of selected cooperatives in La Trinidad
towards borrowing and repaying loans. BS Thesis. Benguet State University, La
Trinidad, Benguet. P. 23.
DUMAGAT, C. 1977. Cooperative New International, New Delhi. P 541 – 542
GANAWED, D.R. 1997. Credit and repayment performance of loan borrowers of
Cooperative Bank of Benguet. Bs Thesis. Benguet State University, La Trinidad,
Benguet. P. 24.
PIMENTEL, A. Jr. and M.R. CUA. 1994. Cooperative Code of the Philippines
(Theory, Law and Practice with CDA Memorandum Circular 1992-1999) Gold
Loop Towers, Amber, Metro Manila, Philippines. P. 160.
SACAY, O.J., et. al. 1995. Small Farmer’s Credit Dilemma. National Publishing Corp.
Manila, Philippines. P. 48.
SINGH, I. J. 1997. Elements of Farm Management Economics. New Delhi: Affiliated
East-West Press Private Ltd. P. 76.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
26
SUPANGA, M.P. 2002. Implementation of loan policies of Philex Employees Credit
Cooperative in Philex, Pacdal, Tuba, Benguet. A Baby Thesis. Easter Colleges
Inc. Baguio City. P.11
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
Republic of the Philippines
Benguet State University
College of Agriculture
La Trinidad, Benguet
DEPARTMENT OF AGRICULTURE ECONOMICS
AND AGRIBUSINESS MANAGEMENT
February 20, 2007
Mr. Felix A. Juguilon
Cooperative Manager
Police Regional Office-Cordillera
Employees Multipurpose Cooperative
Camp Bado Dangwa, La Trinidad, Benguet
Dear Sir;
Warm greetings!
I am a fourth year student taking up Bachelor of Science in Agribusiness Major in
Cooperative Management at Benguet State University. To fulfill my field of study, I am
tasked to conduct a research entitled “Profile of Loan and Repayment of Borrower in
PRO-COR-EMPUC”.
In this regards, may I request information about your cooperative such as the history of
the cooperative and the list of names of the members/borrowers. I appreciate it very much
if you furnish me the necessary information that I will need.
Thank you very much and God bless.
Respectfully yours,
Charlene T. Molchino
Student Researcher
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
29
SURVEY QUESTIONNAIRE
I. General Information
Name (optional) _______________________________________________________
Address ______________________________________________________________
Age: __________ Sex______________ Civil status ________________________
Highest educational attainment
________Elementary
________ Post College
________Secondary
________Vocational
________College
________Others (specify) ______________
II. Profile of Latest Loan
A. Type of loan
_______ Productive: _______Educational
_______Medical
________Providential; _______ Merchandizing
_______ Dry goods entry
_______Sari-sari store
_______Others, specify ____________________________
1. Purpose of loaning (answer according to type of loan borrowed).
a. Productive
_________ Education
_________ Medical
_________ Capital for business
_________ Others, specify ________________________________
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
30
b. Commercial
_________ Sari-sari store
_________ Dry goods entry
__________ Others, specify ____________________________
2. Requirements to be submitted before borrowing loan (pls. check)
__________ Cedula/Community tax certificate
__________ TIN ( Tax Identification No.)
__________ Promissory note
__________ Project proposal
__________ Others, specify ________________________________
3. What is the maturity of the loan you acquired? (pls. check)
_________ Six months but not over 18 months
_________ Over six months but not over 18 months
_________ Others, specify _________________________________
4. How many days/weeks/months you have been processing loan before it was
released? ______________________________________________
a. Are approved loan released immediately?
_______ Yes
_______ No
If no, why?
________ Funds are not available
________The credit committees have to meet first before approving loans.
________Others, specify _____________________________
5. Methods of loan release
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
31
________ Full cash
________ Installment
________ Others, specify ______________________________
6. How is the interest being paid?
________ Deduction from the loan borrowed
________ Paid of maturity
________ Others, specify ________________________________
7. How much is the amount of your latest loan? _______________________
B. Repayment of Loans
1. How do you pay?
________ Through collector
________ Personally go to the coop for payment
________Sending through messenger
________ Others, specify ____________________________________
2. Methods of repayment.
________ Full cash
________ Installment, How many terms? ______________________
________ Others, specify ___________________________________
3. If installment, how?
________ Weekly
________ Monthly
________ Quarterly
________ Annually
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
32
________ Others, specify ______________________________________
a. Before the loan is due, were you reminded of your loan balance by the coop?
_________ Yes
________ No
If yes, how?
_______ Letters
_______ Contact
_______ Others, specify ______________________________________
b. Were you able to repay the loan on maturity date?
________ Yes
________ No
Why?
b.1. _________________________________________________
b.2. _________________________________________________
b.3 __________________________________________________
4. In case the loan is repaid, where did you get the funds for repayment?
________ Salaries
________ Borrowing from others
________ Others, specify ___________________________________
a. Were you forced to sell any valuable property to repay tour loan?
________ Yes
________ No
If yes, what property? (Identify) _________________________________
___________________________________________________________
C. Problem Encountered
1. Loan application
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
33
_______ Delayed processing and approval
________ Many requirements to accomplish
________ Distance from the coop.
________ Unawareness of the procedures in borrowing
________ Limitations on the loanable funds available
_______ Installment release of loan which is inadequate to meet the needs
of borrower
________ Others, specify ___________________________________
Suggestions/recommendations: _____________________________________
_______________________________________________________________
2.Loan repayment
________ Difficulty/inability to repay the loan at maturity date due to:
( ) Wrong timing of collection by the collectors
( ) Diversion of loans to other purposes
( ) Lack of incentives for borrower to repay on time
( ) Others, specify ______________________________________
Suggestions/recommendations: _____________________________________
_________________________________________________________________
D. Alternative Measure to Improve Credit Repayment Performance of Loans.
1. Education
( ) Continuous education of members, officers and staff.
( ) Conduct orientation and trainings to members, officers and staff
( ) Others, specify ___________________________________________
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
34
2. Management
( ) Early notice on the activities of the cooperative
( ) engage yourself in cooperative activities
( ) mingle with members, officers of the cooperative
( ) develop harmonious relationship between officers and members
( ) respect and show good manners with co-members
( ) motivate members to patronize the cooperative
( ) encourage active participation of members
( ) Others, specify _________________________________________
Suggestions/recommendations __________________________________
THANK YOU VERY MUCH.
Profile of Loan and Repayment of B orrower in Police Regional Office – Cordillera
Employees Multipurpose Cooperative (PRO-COR-EMPUC) in Camp Bado Dangwa, La
Trinidad, Benguet / Charlene T. Molchino. 2008
Document Outline
- Profile of Loan and Repayment ofBorrower in Police Regional Office � Cordillera Employees Multipurpose Cooperative(PRO-COR-EMPUC) in Camp Bado Dangwa, La Trinidad, Benguet
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- REVIEW OF LITERATURE
- METHODOLOGY
- RESULTS AND DISCUSSION
- SUMMARY, CONCLUSION AND RECOMMENDATION
- LITERATURE CITED
- SURVEY QUESTIONNAIRE