KATH-CCU Ltd is a non-banking financial institution in Komfo Anokye Teaching Hospital, Kumasi, serving as a financial organization for Government workers on Controller and Accountant General’s Payroll in Ashanti Region.
Membership of the Union is opened to the staff of the health service, their spouses and dependants.
The purpose of the Union is to mobilize savings of its members and provide loans and other financial advisory services to members at fair and competitive interest rate to improve their professional, economic and social status.
The vision of KATH-CCU is to become a financial institution of international repute satisfying its members through prudent financial and economical management, counselling, and consultation advocacy.
The Credit Union shall maintain and use such policies as will enhance effectiveness and efficiency in her operations.
The policies will cover the union’s varied areas of operations such as savings, loans, shares and investment.
1.1 ADMINISTRATION OF THE POLICIES
The policies shall be administered by the Board of Directors, who shall reserve the right to add to, amend or delete from time to time any of the clauses stated herein.
1.2 SAVINGS POLICY
The policy on savings and its related operation shall be known as ‘THE SAVINGS POLICY’.
TYPES OF SAVINGS
- Members Savings
- Youth Savings
- Spouse savings
To mobilize savings from members with the purpose of ensuring that members build up savings for a better standard of living both now and in the future.
1.3.2 To pay back savings on demand to members with interest at competitive rates.
1.3.3 To invest the mobilized savings prudently and profitable in risk free investment only.
The policy shall cover the following areas:
1.4.1 Entry Requirements
1.4.2 Savings mobilization
1.4.3 Interest on savings
1.4.4 Withdrawal of savings
1.4.1 ENTRY REQUIREMENTS
Entry requirements of the accounts shall be as follows
- Ten Ghana cedis ( GH₵.10.00) for entrance fee
- One Hundred Ghana cedis ( GH₵. 100.00) for initial shares
- Ten Ghana cedis (GH₵. 10.00) for initial savings.
- One passport picture
- Photocopy of national ID
1.5 MOBILIZATION OF SAVINGS
The union shall mobilize regular savings from its members only at an agreed value on monthly basis.
- Senior Staff: Minimum-₵50.00 Monthly
- Junior Staff: Minimum-₵20.00 Monthly
Such value shall be determined by the Board of Directors and be reviewed from time to time. The Board of Directors may at their own discretion accept bulk savings from members at agreed terms.
1.6 ACCUMULATED SAVINGS
The union shall receive and accumulate savings such that any individual savings shall not exceed 20% of the credit unions total savings.
1.7 INTEREST ON SAVINGS
Interest shall be paid on member’s savings at a rate to be proposed by the Manager and accepted by the Board of Directors. The rate of interest shall be competitive and not be less than 7% lower than the commercial bank rate at the time of calculation.
Savings balance below GHc 50.00 (Fifty Ghana Cedis) shall not attract interest.
1.8 MODE OF INTEREST PAYMENT
1.8.1 Interest shall be calculated half yearly and added to the accumulated savings of members.
1.8.2 On request, interest payment shall be made by cash to any member.
1.9.0 SAVINGS WITHDRAWAL
1.9.1 Members shall be encouraged to maintain their savings with the society as long as they remain members. They may however withdraw whole or part of their savings under the following conditions.
1.9.2 If a member leaves/intends to leave our area of operations he/she may withdraw his/her accumulated savings so far as the member is not indebted to the credit union or that any portion of the savings has not been used to guarantee somebody’s loan.
1.9.3 Where the member is indebted to the credit union, his/her savings cannot be withdrawn so far as the savings serves as a collateral security.
1.9.4 Where the indebtedness is such that a portion of the savings pledge as security has been released, only that portion released plus interest calculated on it can be withdrawn.
1.9.5 Savings which are frozen to guarantee a loan cannot be withdrawn as long as they remain frozen.
1.9.6 Shares dividends converted to savings may be withdraw.
1.9.7 Savings withdrawal shall be permitted at any intervals subjected to no charges.
1.9.8 A member shall be required to give at least 90 days notice on his/her intention to resign from membership subject to conditions in article 37 of the Credit Union’s bye-laws.
1.9.9 RISK MANAGEMENT- LIFE SAVINGS
KATH CCU shall insure all members’ savings. The insurance/ benefit would be paid to the family or the beneficiary (ies) of the deceased. When a member dies, his/her savings balance shall be doubled and paid to the beneficiary (ies). The higher your savings, the higher your benefits
1.10.0 YOUTH SAVINGS
1.10.1 Members of KATH-CCU can open an account for their children in the name of the child from birth to 17 years.
1.10.2 The minimum balance of the account shall be GH₵100.00. Holders of such accounts shall maintain a minimum share balance of GH₵ 200.00.
1.10.3 The accounts shall attract 2% interest rate higher than that of normal adult savings.
1.10.4 Withdrawal from this account shall be twice yearly. More than two withdrawals in a year from the accounts disqualify one from getting interest on the accounts.
1.10.5 Holders of the accounts shall make regular savings (at least GH₵ 10.00) a month.
1.10.6 The accounts can be used as a security for loan by the parent.
1.10.7 Entry requirements of the accounts shall be as follows
- Ten Ghana cedis ( GH₵10.00) for entrance fee
- One Hundred Ghana cedis ( GH₵100.00) for initial shares
- Ten Ghana cedis (GH₵10.00) for initial savings.
1.10.8 The youth shall be entitled to end of year package as determined by the Manager.
1.10.9 Upon attainment of 18 years the child shall cease to be a member of the youth savings programme.
1.10.10 Holders of such account shall not vote during elections.
1.11.0 SPOUSE SAVINGS
1.11.1 Admission shall not be different from the normal staff. Interest on this type of savings shall also be the same as KATH staff.
1.11.2 Holders of such accounts can use it to access loans. Loans granted under this accounts shall be strictly according to the union’s loan policy (Twice your savings)
1.11.3 Holders shall qualify for loans after six months of operation with the union. Such loans must be guaranteed by two people. (The wife/husband and another staff.)
1.12.0 GUARANTEE SAVINGS (SAVINGS TOWARDS RETIREMENT)
1.12.1 A member can operate this type of savings towards his/her retirement.
1.12.2 Holders of such account can use it to access loan.
1.12.3 No withdrawal is made from this type of savings until retirement.
1.12.4 Interest on this type of account shall be calculated annually and shall attract interest rate higher than that of normal savings.
1.12.5 Holders of the account shall make a committed regular savings (at least GH¢10.00) a month.
To comply with the co-operative law which states that “before a person is accepted as a member of any co-operative venture, she/ he might have paid the required entrance fees and at least the minimum required share(s)” this document herein called THE SHARE POLICY seeks to regulate the shareholdings of members. Each member shall have a period of six months to acquire the minimum shares.
2.1.1 To regulate the shareholdings of members.
2.1.2 To determine the level of acquisition of shares in the Credit Union
2.1.3 To ensure equitable distribution of dividends.
2.2.0 PURPOSE OF SHARES
2.2.1 To become a co-owner of the Credit Union and be able to participate in the democratic process.
2.2.2 To build a sound capital base for the Credit Union.
2.2.3 Shares also serve as a risk capital a member’s liability is limited to the amount of capital(s) he owns.
2.2.4 Share improve upon the liquidity situation of the credit union
2.2.5 Share serves as funds for expansion of the credit union.
2.3.0 VALUE OF SHARES.
The value of each ordinary share of the credit union shall be GH₵2.00 (Two cedis only)
2.4.0 LEVEL OF SHAREHOLDINGS
2.4.1 Every member or prospective member of the Komfo Anokye Teaching Hospital Credit Union Ltd. Shall be required to own at least the minimum shares in compliance with the co-operative decree 252 of 1968.
2.4.2. Junior Staff: The minimum share shall be (GH₵ 200. 00) Two Hundred Ghana cedis (100 shares of ₵2.00 each).
Senior Staff: The minimum share shall be (GH₵ 500.00) Five Hundred Ghana cedis (250 shares of ₵2.00 each)
Board and Executive Members: The minimum share shall be (GH₵ 500.00) Five Hundred Ghana cedis (250 shares of ₵2.00 each)
Staff of the Union: The minimum share shall be (GH₵300.00) Three Hundred Ghana Cedis (150 shares of ₵2.00each)
A member is allowed to own or buy more than the minimum share. The Board of Directors may review the minimum share annually where necessary, in order to comply with provisions under (4, 3) below and all members shall be required to comply with such an increase.
2.4.3 The minimum aggregate shares subscribed at any given year shall be equal to at least 10% of the total assets of the credit union.
2.4.4 Shares subscribed shall be evidenced by the issuance of a passbook. In the absence of a passbook, share certificates shall be issued.
2.4.5 No member shall be allowed to hold more than 20% of the total share of the credit union at any given time.
2.5.0 SHARE DIVIDENDS
2.5.1 Dividends shall only be declared after interest on member’s savings has been paid and a net profit is declared.
2.5.2 The rate of dividends shall be proposed by the Manager to the Board of Directors after a net profit has been declared. Dividends, when proposed, shall be paid to members only after it has been approved by a properly constituted Annual General Meeting (Article 48 of Credit Union bye-laws).
2.5.3 Share dividends, when approved shall be paid into members’ shares accounts, but could be taken by cash at the option of the member after filling a prescribed form.
2.5.4 Shares balance below GH₵ 200.00 (Two Hundred Ghana Cedis) shall not attract dividend.
Should there be any liquidation of the credit union all debts incurred by the Union shall be defrayed with members’ shareholdings only.
This means that liability of a member for debts of the credit union shall be limited to his/her shareholdings only and shall not include his/her savings.
2.7.0 VOTING RIGHTS
2.7.1 All shareholding members shall have equal voting rights.
2.7.2 Members who have not paid up to one hundred percent (100%) of their minimum share shall not have the right to vote at the Annual General Meeting.
2.8.0 WITHDRAWAL OF SHARES
2.8.1 Shares shall not be withdrawn either in part or whole except in the event of resignation, where the member shall be required to give at least ninety (90) days.
3.0 LOAN POLICY
The Loan Policy is designed to ensure that loans granted meet the borrower’s immediate needs and his ability and willingness to repay without incurring undue risk to the Credit Union. It also ensures the return of the borrowed money with a reasonable interest while at the same time discouraging loan delinquencies.
3.1 LOAN APPLICATION
3.1.1 All applications for loans shall be made on a prescribed form provided by the Credit Union. The application forms shall set out the amount applied for, the purpose of the loan, the terms of repayment and the type of security if any.
3.1.2 Loan application shall be considered in the order in which they are received. However, whenever there are more applications for loans than the funds available, preference shall be given to smaller loans.
Where amounts applied for are approximately the same, preference will be given to loans for shorter periods.
Further priority shall be given to:
- Members who have never had loans
- New members who have qualified for loans
- Members who have cleared their first loans and have applied for new loans
3.2.1 Loans shall be granted to members only
3.2.2 A borrower shall have completed at least six (6) months uninterrupted membership and three (3) months if savings contribution is at source.
3.2.3 A member who withdraws from the Credit Union and joins later will be treated as a new member.
3.2.4 A member who retires from the common bond but retains his/her membership shall be granted a loan not exceeding his/her total savings.
3.2.5 A member may not be granted a second loan until he/she clears the first loan in full or until he/she has paid three quarters (75%) of the first loan. In such a case, the existing balance should be paid immediately after taking the new loan.
There may be valid reasons for a loan to be refinanced provided (75%) of the existing loan is paid. In such a case the existing loan balance should be paid immediately after taking the new loan.
3.4 RESCHEDULING OF LOAN PAYMENTS
The Loans Committee/Board may agree to reschedule a member’s payments if such action is deemed necessary.
3.5.0 AMOUNT OF LOAN
3.5.1 UNION’S LIMITATION
The total loans granted to members at any period shall not exceed (70%) of the net worth of the Credit Union. Net worth means total shares, savings and reserves. This is set up to ensure that the Credit Union maintains sufficient operational funds.
3.5.2 LIMITATON PER MEMBER
The lending ratio shall be 1:2. The limit per member will be determined by the results of the analysis of the loan using the 5c’s as the lending criteria. This means that a member who has GHC.10.00 in his/her savings accounts can borrow up to GH₵. 20.00.
KATH staff with loan shall pay 50% of their loan contracted before their spouse could be granted loan. The ceiling for all type of loans shall be GH₵ 100,000.00 except loan within savings.
3.5.2b NORMAL LOAN
- A member shall be granted a loan equivalent to twice of his/her savings and shares
- The interest rate shall be 2.5% monthly on the unpaid balance
- The repayment of the loan shall not exceed 24 months.
- Must have a good savings pattern.
3.5.3 SPECIAL LOAN/ABILITY TO PAY
This type of loan is designed for members who need huge capital more than twice of their savings.
3.5.4a QUALIFICATION FOR SPECIAL/ABLITY TO PAY LOAN
- A member shall be granted a loan equivalent to four times of his/her savings.
- Must have a good savings pattern and ability to repay.
- Good track records of member’s loan repayment of previous loan contracted.
- Repayment duration of this loan shall not exceed 2 years (24 months) maximum.
- Such loans shall be granted when funds are available.
- Applicant must have GH₵1000.0 as shares.
- The interest rate shall be 3% monthly on the unpaid balance.
3.5.4b EMERGENCY LOANS
The policy defines emergency loans as sudden hospitalization, funeral, accidents, house rents and school fees.
- Only one emergency loan must be outstanding to a member within twelve months.
- Savings contribution of the applicant must be at source.
- The interest rate shall be 3.5% monthly on the unpaid balance
- The duration of such loans shall not exceed 24 months.
- The amount of loan granted shall be based on the monthly deductions.
3.5.4c LOAN WITHIN SAVINGS
- A member shall take a loan within or equal to his/her total savings
- Interest rate shall be 1% monthly on the unpaid balance.
- The duration of such loans shall not exceed 24 months.
3.5.4d SALARY LOANS
The policy defines Salary loans as loans granted to members who channel all their salary to KATH Credit Union LTD
- Only one salary loan must be outstanding to a member at any point in time.
- The member must be taken his/her salary from KATH Credit Union LTD
- The interest rate shall be 3% monthly on the unpaid balance
- The duration of such loans shall not exceed 36 months.
- The amount of loan granted shall be based on 50% of the member’s net salary or more than 50% on negotiation
3.5.4e CREDITLINE AND OVERDRAFT POLICY
- Only members who channel their salary to KATHCCU qualifies
- Interest is 5% monthly on reducing balance.
- Payment must be made within Three (3) months for Creditline.
- Payment must be made within One (1) month for Overdraft
3.5.5 GRIEVANCE PROCEDURE
(a) Any member who feels aggrieved when his/her loan application is rejected may appeal to the Board for redress.
(b) Any Board member who feels aggrieved when his/her loan application is rejected may appeal to the Supervisory Committee for redress.
3.6.0 INTEREST ON LOAN
3.6.1 Interest rate shall be fixed from time to time by the Board of Directors.
3.6.2 The rate of interest shall be 2.5% per month on the unpaid balance for Normal Loans.
3.6.3 The rate of interest shall be 3% per month on the unpaid balance for Special Loans and 3.5% per month on the unpaid balance for Emergency Loans.
A penalty rate of interest shall be charged at 5% for due balances not paid by the due date.
3.7.1 Every member receiving a loan shall execute a bond in favour of the Credit Union in a prescribed form of promissory note for the amount received and the interest to be incurred.
3.7.2 All loan balances in excess of the borrowers’ savings and shares must be secured by guarantors. The guarantors shall be members of the credit union.
3.7.3 No member of the Credit Union shall stand as a guarantor for a second loan while a former one remains unpaid.
3.7.4 The Board, Loans Committee and Supervisory Committee members are not permitted to co-sign. Co-signing of the loan application could influence the decision of the application.
3.7.5 All loan applicants shall have one guarantor who shall declare that their salary should be deducted at source to defray the loan they have guaranteed should the applicant default or leave the hospital.
3.7.6 All loan applicants shall agree that loan repayment should be deducted at source from their salary in case they default in repayment for three consecutive months.
Also they shall authorize the union to use their provident fund or any entitlement due them to defray their outstanding loan balance in case they leave the hospital either through retirement, transfer, resignation or dismissal.
3.8.0 APPROVAL OF LOANS
3.8.1 The Manager can approve a member’s loan which is fully secured by his/her own savings and not already committed as security to an outstanding loan.
3.8.2 All loans above the Manager’s limit shall be approved by a simple majority decision of the Loans Committee. The Committee shall meet at least once a month, except for emergencies.
3.8.3 A Loan Committee member’s application for loan shall be referred to the Board of Directors for approval.
3.8.4 Upon approval, members shall pay a processing fee of 1%.
3.9.1 The repayment period shall be determined by the Board of Directors, but in general the period may not exceed twenty four (24) months.
3.9.2 Loan repayment should be made at least monthly by cash.
3.10.0 DEFAULTERS AND WITHDRAWALS
3.10.1 Where a member wishes to withdraw from the Credit Union membership, he/she shall be required to give the Union a notice of not less than three months of his/her intention to withdraw.
3.10.2 No member shall be allowed to withdraw his/her membership unless the loan is repaid in full or loan balance can be fully offset by the member’s savings. Such a member will also have to satisfy the Union that all loans guaranteed have been paid in full or the balance does not exceed the savings of the members whose loans were guaranteed.
3.10.3 No member shall be allowed to withdraw his/her savings unless he/she has settled in full all loans balances.
3.11.0 DELINQUENT LOANS
3.11.1 Loan delinquency shall be the responsibility of the Board and the Loans Committee.
3.11.2 Loan collection should be undertaken by the Loans Committee or any other person chosen by the Board.
3.11.3 A delinquent loan, by definition shall be any loan not paid after the due date unless an extension is granted.
3.11.4 The Treasurer or the Secretary or Manager shall maintain a record of delinquent loans listed according to the length of time those loans have been delinquent.
3.11.5 Collection procedure for delinquent loans should be as follows. The Credit Department will monitor and act on the loan delinquencies as follows:
a) Utilize the Delinquency daily report from Cusoft.
b) Make phone or email contact with the members to arrange for loan repayment from 7 days to 30 days.
c) If unable to contact the member, a Delinquent loan letter will be issued outlining the details and asking the member to contact the credit department.
d) After 60 days (2 months) delinquent, issue a letter to the defaulter and the guarantor to demand payment.
e) At 90 days delinquent the following steps will be followed:
- Freeze the savings of the guarantor
- Deduct both the borrower and the guarantor at source to buildup savings of the borrower and the guarantor
- The manager shall meet the defaulter and guarantor to establish new repayment plan.
f) Should payment of the loan not be received within fifteen days after the due date of the loan duration, the Loans committee should send the member a collection letter, copied to the guarantors outlining the obligations of the guarantor which will be if payment is not forthcoming. A reply in person should be requested from both the guarantor and the borrower.
g) If no reply to the collection letter issued by the Loans committee within fifteen days of issue the Board should invite the borrower to their meeting and request for payment and explanation for the reason for the delinquency.
h) If no payment is still forthcoming from the borrower, the board should consider liquidation of the loan by writing off the savings of the borrower and or the guarantor(s) or disposing of any collateral used to secure the loan.
i) The Board shall take a legal action to recover the loan if the above process fails.
3.12.0 RISK MANAGEMENT- LOAN PROTECTION PLAN (LPP)
3.12.1 The insurance policy protects the members and their families against financial losses and difficulties when a Credit Union member dies or suffers disabilities.
This means that when a member takes a loan, he/she has an obligation of repaying this loan and the loan interest. In the process of paying the loan and the unexpected happens (i.e. death or permanent disability) the insurance comes in to pay off all the loan outstanding to the Credit Union and also refund all repayments made by the member before the incident occurred to the next of kin.
3.12.2 The premium for this insurance is paid by the member.
4.0 INVESTMENT POLICY
4.1.0 All monies not needed for the day-to day business of the credit union shall be invested in any safe manner as provided for by paragraph 43 of the co-operative decree.
4.2 MANAGEMENT OF INVESTMENTS
4.2.1 The Manager shall have the authority as well as the discretion to invest surplus funds of the union in a manner that will ensure maximum yield at risk free investments only.
4.2.2 The investment of the credit union at a given time shall be 18% minimum of total assets.
4.2.3 Where it becomes necessary to invest in a long term venture, the Board of Directors shall form a committee for that purpose.
4.3.1 To invest all surplus funds of the union to increase profitability.
4.3.2 To build a strong financial base for the union
4.3.3 To ensure that, all surplus funds of the union are put to productive use.
4.4 INVESTMENT PORTFOLIO.
4.4.1 The union may invest in the following areas:
4.4.2 Treasury bills
4.4.3 CUA Central Finance Facility (CFF)
4.4.4 Government bonds
4.4.5 Fixed deposits
4.4.6 Stock/shares of reputable companies
4.4.7 Investment in other registered financial institutions.
The whole or any part of this document shall be subject to amendment whenever necessary.