Credit Union Management

This report was prepared by Korotoumou Ouattara, Mayada Baydas and Julia Paxton (SSP Consultants). Cecile Fruman and Carlos Cuevas (SBP) contributed useful guidance and support. Valuable comments were contributed by Laurence Rouget-Le Clech (AFTP1), Jennifer Isem (CGAP), and Gilles Galludec (CGAP). The authors wish to thank Chet Aeschliman and Roland Thurlow (WOCCU) for their contributions. A background report is available upon request.

Case Studies in Microfinance Building An African Credit Union From the Ground Up: Lessons from the Caisses Populaires D'Epargne et de Credit in Niger by Korotoumou Ouattara, Mayada Baydas, and Julia Paxton April 1988 TABLE OF CONTENTS INTRODUCTION BUILDING A SUSTAINABLE CREDIT UNION IN A CHALLENGING ENVIRONMENT LOAN AND SAVINGS PRODUCTS | PERFORMANCE DISCUSSION: LESSONS FROM OVERCOMING OBSTACLES CONCLUSIONS | ANNEX 1 | ANNEX 2 LIST OF ACRONYMS BDRN BIAO CAMEL CFAF

Ma-a Parish MultiPurpose Cooperative (MPMPC) is mainly engaged in lending operations. As such, collection is integral in its operations. For MPMPC, the existing credit and collection policy and practices are ineffective. The ratio of their overdue accounts is escalating in the past years. In 2015, past due accounts already comprise 31.28% of the total loans granted. The primary purpose of the study is to recommend policies that will improve the collection efficiency of MPMPC. The study used participatory action research. It also used quantitative and qualitative research methods. Documentary analysis was done using the data available in the office of MPMPC. Then, we administered the survey questionnaire to the members. To validate the result in the survey, we conducted two Focus Group Discussions (FDG), one for the borrowers and another for the officers. The study concluded that several factors contribute to the collection inefficiency of MPMPC. These factors include inconsistency of sending collection letters, payment and spending priority of borrowers, mismatch of payment terms and schedule of payments between borrowers' preference and cooperative practices, borrowers' perception about penalties, borrowers paying habit, and lack of Cooperative Credit and Collection Policy Manual. The research findings and conclusions arrived at led to recommendations to the Board of Directors of MPMPC. These recommendations include conducting income generating project seminars, encourage young professionals to join the cooperative, ensure proper monitoring of the postdated checks from borrowers, regularly send Statement of Accounts (SOA) to all borrowers, monitor the business of those who borrowed for business purposes, maximize the services of the collector, review the classification of loans and its respective terms of payment, formulate a credit and collection policy manual, and conduct continuing cooperative members' education.

Over the last decade, Nepal has turned into a microfinance laboratory, exploring various approaches to provide financial services to the rural poor, both in the hill and plain areas of the country. The list of institutions and programs engaged in rural finance is long and includes informal credit and savings associations, savings and credit co-operatives, multi service cooperatives, Grameen Banks, village banks, government and privately owned development banks as well as microfinance NGOs. Rural Finance Nepal (RUFIN) is a joint Nepali-German project, implemented by the Agricultural Development Bank of Nepal (ADBN), with technical assistance from the German Agency for Technical Co-operation (GTZ). RUFIN aims at bringing sustainable financial services to the rural poor. The largest provider of rural credit is the Agricultural Development Bank of Nepal (ADBN). In 1975 it started the Small Farmer Development Program (SFDP), the ?mother? of all microfinance activities in Nepal, by introd...

Ma-a Parish MultiPurpose Cooperative (MPMPC) is mainly engaged in lending operations. As such, collection is integral in its operations. For MPMPC, the existing credit and collection policy and practices are ineffective. The ratio of their overdue accounts is escalating in the past years. In 2015, past due accounts already comprise 31.28% of the total loans granted. The primary purpose of the study is to recommend policies that will improve the collection efficiency of MPMPC. The study used participatory action research. It also used quantitative and qualitative research methods. Documentary analysis was done using the data available in the office of MPMPC. Then, we administered the survey questionnaire to the members. To validate the result in the survey, we conducted two Focus Group Discussions (FDG), one for the borrowers and another for the officers. The study concluded that several factors contribute to the collection inefficiency of MPMPC. These factors include inconsistency of sending collection letters, payment and spending priority of borrowers, mismatch of payment terms and schedule of payments between borrowers' preference and cooperative practices, borrowers' perception about penalties, borrowers paying habit, and lack of Cooperative Credit and Collection Policy Manual. The research findings and conclusions arrived at led to recommendations to the Board of Directors of MPMPC. These recommendations include conducting income generating project seminars, encourage young professionals to join the cooperative, ensure proper monitoring of the postdated checks from borrowers, regularly send Statement of Accounts (SOA) to all borrowers, monitor the business of those who borrowed for business purposes, maximize the services of the collector, review the classification of loans and its respective terms of payment, formulate a credit and collection policy manual, and conduct continuing cooperative members' education.

Ma-a Parish MultiPurpose Cooperative (MPMPC) is mainly engaged in lending operations. As such, collection is integral in its operations. For MPMPC, the existing credit and collection policy and practices are ineffective. The ratio of their overdue accounts is escalating in the past years. In 2015, past due accounts already comprise 31.28% of the total loans granted. The primary purpose of the study is to recommend policies that will improve the collection efficiency of MPMPC. The study used participatory action research. It also used quantitative and qualitative research methods. Documentary analysis was done using the data available in the office of MPMPC. Then, we administered the survey questionnaire to the members. To validate the result in the survey, we conducted two Focus Group Discussions (FDG), one for the borrowers and another for the officers. The study concluded that several factors contribute to the collection inefficiency of MPMPC. These factors include inconsistency of sending collection letters, payment and spending priority of borrowers, mismatch of payment terms and schedule of payments between borrowers' preference and cooperative practices, borrowers' perception about penalties, borrowers paying habit, and lack of Cooperative Credit and Collection Policy Manual. The research findings and conclusions arrived at led to recommendations to the Board of Directors of MPMPC. These recommendations include conducting income generating project seminars, encourage young professionals to join the cooperative, ensure proper monitoring of the postdated checks from borrowers, regularly send Statement of Accounts (SOA) to all borrowers, monitor the business of those who borrowed for business purposes, maximize the services of the collector, review the classification of loans and its respective terms of payment, formulate a credit and collection policy manual, and conduct continuing cooperative members' education.

Using the data set disclosed in annual reports and extracted from the ledger of Pokhara Royal Cooperative Society Limited (PRCSL), this paper examines the financial health of PRCSL in the framework of PEARLS. The health check up conducted on the basis of publicly available financial data concludes that PRCSL has not earned enough to pay up the return on member share capital and build up the institutional capital as the second line of defense for saving deposits of member-clients. In addition, the perusal of indicators of different components of PEARLS indicates that the financial health of PRCSL is not so sound.

1. Abstract Saving and credit cooperatives (SACCOS) are financial institution that are the owned, controlled and capitalized by members. (Tirfe, A.G.(2014) Financial Performance of Rural Saving and Credit Cooperatives in Tigray, Ethiopia. Research Journal of Finance and Accounting). The overall objectives of this study were to examine development and financial performance of ACCESS Branded cooperatives of Nepal using PEARLS model. This study is mainly based on the data of PEARLS report of 13 ACCESS Branded SACCOS of Nepal, which is collected from their website and directly by the mail from managers of the SACCOS. This study explores the financial performance of ACCESS Branded SACCOS including strength and weakness of financial structure taking the audited financial data of June 16, 2018 (32 Ashad 2075). This study covered the financial analysis of protection, effective financial structured, assets quality, rate of return, liquidity and sign of growth. PEARLS is a set of 46 financial ratios used to evaluate and monitor the financial stability of credit unions within the standard of

The credit union movement has experienced rapid growth across the United States in recent years. After the financial crisis of 2007-2008, US credit unions emerged more resolutely as trusted financial partners, able to maintain lending during the credit crunch and offering better loan and deposit rates, greater investment security and superior customer service. , ,  Credit unions are known for their focus on consumer banking. Yet this has obscured their changing relationship with businesses.

This paper seeks to discover the state of US credit union capabilities with respect to business banking services. After creating a classification for the level of US credit union business banking capabilities, we conducted informal, semi-structured interviews with a small sample of key stakeholders from the US credit union industry in order to provide insights into the nature of existing US credit union business banking capabilities.

Since US credit unions have been shown to provide direct economic benefits from consumer banking,  along with a positive track record for small businesses,  we are interested in credit unions’ potential to serve larger businesses beyond the provision of loans. Given that businesses have higher average deposits than consumers,  there is potential for shifting significant resources from banks to credit unions.

Our findings suggest that while many US credit unions offer Basic Business Services, and some US credit unions offer Semi-comprehensive Business Services, no US credit union offers Comprehensive Business Services. We discovered three main factors holding back the development of these commercial capabilities: mission constraints; lack of apparent business demand; and lack of a strong business case according to a cost-benefit risk analysis. These factors appear to reinforce each other in a vicious cycle.

However, these factors may also present points of leverage for those seeking to expand business service capabilities within the US credit union system. For example, if weak business demand stems from an absence of targeted marketing to the private sector, a campaign to document pledged allegiance could reverse this phenomena. Indeed, we see strategic interventions at one of the three points offering the ability to shift the system from a vicious cycle to a virtuous one.

This paper argues that Credit Unions (CUs) are important drivers for socio-economic empowerment in Indonesia, particularly in the context of microfinance. A case study on Sauan Sibarrung CU (SSCU) was employed to unearth features of empowerment regarding who is empowered, what is the impact of empowerment, and how is empowerment conducted. Related to who are empowered, it is proved that SSCU serves lower-middle class groups in society. Regarding its impact, SSCU has been helping members improve their life quality in both economic and non-economic dimensions. These beneficial impacts have been created through education and financial services
provided to members.

Menggunakan studi kasus atas pengalaman seorang aktivis Credit Union bernama Dodo, tulisan ini hendak menjawab pertanyaan: Bagaimana Credit Union menjadi gerakan yang mengubah kualitas hidup anggotanya dalam dimensi fisik, mental dan spiritual? Apa bukti bahwa perbuhan itu terjadi? Dan bagaimana proses formasi seorang aktivis CU?

This study is an assessment of the financial performance of a credit union in West Timor, Indonesia established by a catholic diocese in 2007. After five years of operation, the credit union reported to have 12,967 members coming from different religious denominations: catholic, Protestants and Muslims and its operations spread in five branches in West Timor.

The assessment used the PEARLS Monitoring System that was established by the World Council of Credit Union (WOCCU).  PEARLS stands for protection, effective financial structure, assets quality, rate of return and cost, liquidity, and signs of growth. It is a system of 39 financial ratios to monitor the performance of credit unions. The study analyzed financial performance from 2007 to 2012 and proposed improvements on the financial operations for its sustainability. 

Its second objective was to determine customer satisfaction of members to services rendered. It used semi-structured survey instruments, personal interview, and focus group discussion (FGD) to gather data.

Findings of the study revealed that members’ savings were not sufficiently protected and were at high risk. This may be due to a high number of delinquent loans. As of December 2012, there were 1,388 delinquent borrowers out of 10,387 active borrowers. The high delinquency rate increased loan portfolio risk and weakened portfolio quality. It decreased the credit union loan portfolio profitability – leading to low overall earnings (asset yield). Administrative cost was significantly high. Moreover, the high delinquency rate drained capital reserves since a huge amount of loan loss provision and were written offs. The end result is slump in net institutional capital.

Liquidity ratio was high which can mean inefficient management of liquid assets due to idle or low earnings assets.  High delinquency, excess liquidity coupled with inefficiency in operations resulted in low net income causing all other areas to perform below the ideal standards. Results showed that the credit union needed improvements in portfolio quality and liquidity management. However, members’ satisfaction survey results showed that members were very satisfied with almost all of the services offered by the credit union.

This study focused only on financials’ side of the credit union. It is recommended that in future studies it would include governance and organizational performance to get a more comprehensive picture about credit union’s performance.

Keywords: credit union, financial performance, West Timor, Indonesia, customer satisfaction