CO-OPERATIVE CREDIT UNION REGULATIONS, 2015

ARRANGEMENT OF REGULATIONS

Regulations

General provisions

1. Scope
2. Purpose of Regulations
3. Co-operative Credit Union
4. Functions of a Co-operative Credit Union
5. Powers of the Bank
6. Licensing of a Co-operative Credit Union

Co- operative Credit Unions Supervisory Agency

7. Establishment of the Co-operative Credit unions Supervisory Agency
8. Functions of the Agency
9. Composition of the Agency
10. Qualification for membership of the Agency
11. Tenure of office of members
12. Meetings of the Agency
13. Disclosure of interest
14. Allowances

Conduct of business of a Co-operative Credit Union

15. Registered office and records
16. Financial Standards
17. Deposits
18. Loans
19. Investment
20. Reserves and dividends
21. Borrowing by Co-operative Credit Union
22. Application of section 25(3) to (6) of Act 792

Miscellaneous provisions

23. Interpretation

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In exercise of the power conferred on the Minister responsible for finance by section 45 of the Non-Bank Financial Institutions Act, 2008 (Act 774) and acting in consultation with the Bank of Ghana, and the power conferred on the Board under section 4(2) of the bank of Ghana Act, 2002 (Act 612), these Regulations are made this 28^th day of October, 2015.

General provisions

Scope

1. These Regulations apply to a Co-operative Credit Union register under a law that provides for the registration of Co-operative Credit Unions in Ghana, and licensed by the Bank of Ghana.

Purpose of Regulations

2. The purpose of these regulations is to
3. Establish the Co-operative Credit Unions Supervisory Agency and provide for the functions of that Agency ;and
4. Provide for rules to govern the licensing, operation and supervision of Co-operative Credit unions.

  Co-operative Credit Union

3. (1). the purpose of a Co-operative Credit union is to provide financial service to members of that Co-operative credit Union.

(2). In furtherance of sub regulation (1), a co-operative Credit Union shall promote saving, lending and operate in accordance with the following co-operative principle:

1. membership is voluntary;
2. membership shall not be based on gender, race ,colour, ethnic origin ,creed, or social or economic status;
3. administration shall be based on democratic principles;
4. education of members shall be a continuous process;
5. a Co-operative Credit Union shall collaborate with other Co-operative credit Unions to Serve the members of the Co-operative Credit union and Communities at the local national and international level; and
6. the share capital shall yield a limited rate of divided as prescribed by these regulationor by-laws.

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(3) Despite sub regulation (2),a person shall not hold an office in the management of a Co-operative Credit Union Association unless thatperson is a Ghanaian.

Functions of a Co-operative Credit Union

(4) A Co-operative Credit union shall

1. accept deposits from members of the Co-operative Credit union;
2. With the approval of the Bank, provide computerized banking serves, including the operation of Automated teller machines, telephone banking, inter-Credit Union networks and smart cards to

Members of the Co-operative Credit Union;

1. Grant loans to members of the Co-operative Credit Union ;
2. Operate branches of the co-operative Credit Union;
3. Provide Safety deposit services to members of the Co-operative Credit Union;
4. Act as a trustee or an executor ,where the Co-operative credit union is authorized by the

The registrar to provide that service;

1. Offer credit card and payment card services;
2. Perform other functions incidental to the purpose of a co-operative credit union; and
3. Perform any other functions prescribed by law or approved by the Bank.

Powers of the Bank

5.(1) The bank shall license a Co-operative Credit Union and supervise the management and operation of the Co-operative Credit Union.

(2) Subject to the powers and functions the Bank under Bank of Ghana Act, 2002(Act 612) and any other enactment, the Agency established under regulation 7(1) may, on behalf of the Board, by notice published in the Gazette and in two daily newspapers of national circulation, delegate specified supervisory functions to a Co-operative Credit unions Association appointed in accordance with these regulations.

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Licensing of a Co-operative Credit Union

1. (1) A person shall not carry on the business of a co-operative Credit Union unless

• the co-operative Credit Union is registered and incorporate under sections 5 and 6 of the

Co-operative societies Act, 1968 (N.L.C.D. 252); and

• Licensed by the Bank in accordance with the Non-Bank Financial Institution Act,2008 (Act774)

(2) A person who contravenessub regulation (1) Commits an offence and is liable on summary

Conviction to a fine of one thousand penalty units or to imprisonment for a term of four years or to both the fine and imprisonment.

Co-operative Credit Unions Supervisory Agency

Establishment of the Co-operative Credit Unions Supervisory Agency

2. (1) There is established by these Regulations a body to be known as the Co-operative Credit  Unions Supervisory Agency.

(2) The Agency is responsible for the inspection and supervision of Co-operative Credit Unions.

Functions of the Agency

3. (1) the Agency shall ,under the direction of the Board ,
4. Issue general rules and guidelines as regards the implementation of policies and enforcement of procedures by Co-operative Credit Unions;
5. Enforce credit policies that are approved by the bank , for Co-operative credit unions;
6. Monitor the financial condition of a co-operative credit Union and take action where the situation warrants a corrective measure in the operation of the Co-operative Credit Union in order to protect the interest of the members of that Co-operative Credit Union;
7. Appoint a Co-operative Credit Unions Association to carry out routine supervision of Co-operative Credit Unions;and

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(e) Formulate rules and guidelines for the guidance of a Co-operative Credit Union Association or any other body authorized by the agency to undertake the supervision of Co-operative Credit Unions.

(2)   In furtherance of the performance of its functions, the Agency shall

( a) Submit annual reports to the Bank not later than three calendar months after the end of Each financial year;

• Comply with rules issued by the bank and enactments;
• Collaborate with the Bank in the monitoring and supervision of Co-operative Credit Unions;
• Undertake supervisory functions in respect of Co-operative Credit Unions specified under these regulations ;and
• Perform any other functions incidental to the performance of its supervisory functions.

Composition of the Agency

9. (1) the Agency consist of

(a) An executive chairperson nominated by the Governor of the Bank;

(b) two representative of the Bank not below the rank of a director ,nominated by the Governor of

The Bank;

• one representative of the ministry responsible for finance not below the rank of a directors of a director ,nominated by the minister;
• one representative nominated by the Board of directors of a Co-operative Credit Unions Associations appointed under regulation 8 (1) (d);
• One representative of the Department of Co-operative; and
• One representative of the Ghana Microfinance Institutions Network.

(2) The Board of the Bank shall appoint the members of the Agency.

Qualification for membership of the Agency

10. A person qualifies to be a member of the Agency if that person

(a) has not suspended or compounded payment to creditors;

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(b) Has not been convicted of an offence involving fraud or dishonesty; and

(c) Is not disqualified or suspended from practicing a profession by an order of a

Competentauthority.

Tenure of office of member

11. (1) A member of the agency, other than an executive member, shall hold office for a period of not more than three years and is eligible for re-appointment but a member shall not be appointed for more than two terms.

(2) A member of the Agency may, at any time, resign from office in writing addressed to the board.

(3) A member of the Agency who is absent from three consecutive meetings of the Agency without sufficient cause ceases to be a member of the Agency.

(4) The board may, by a letter addressed to a member, revoke the appointment of that member for stated reasons

(5) Where a member of the Agency is,for sufficient reasons unable to act as member, the minister shall determine whether the inability would result in the declaration of a vacancy.

(6) where there is a vacancy as a result of a resignation under sub regulation (2),the Board shall appoint  a person to till the vacancy .

(7) where there is a vacancy

(a) under Sub regulation (3)

(b)  As a result of a declaration under sub regulation (5); or

(c)  by reason of the death of a member ,

The minister shall notify the Board, and the Board shall appoint a person to fill the vacancy.

Meetings of the Agency

12. (1) The Agency shall meet at least once every four months for the dispatch of business at the time and in the places determined by the chairperson.

(2) The chairperson shall, at the request in writing of not less than one-third of the membership of the Agency, convene an extra –ordinary meeting of the agency at the place and time determined by the chairperson.

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(3) The quorum at a meeting of the Agency is five members or a greater number determined by the agency in respect of an important matter.

(4)  The chairperson shall preside at meeting of the Agency and in the absence of the chairperson; a member of the Agency elected by the members present from among their numbershall preside.

(5) Matters before the agency shall be decided by a majority of the members present and voting and in the event of an equality of votes, the person presiding shall have a casing vote.

(6) The Agency may co-opt a person to attend a meeting of the Agency but that person shall not vote on a matter for decision at the meeting.

Disclosure of interest

13. (1) A member of the Agency who has an interest in a matter for consideration.

(a) Shall disclose the nature of the interest and the disclosure shall form part of the record of the consideration of the matter; and

(b) Shall not be present or participate in the deliberations of the Agency in respect of the matter.

(2) A member who fails to disclose an interest ceases to be a member of the Agency, and subsections (7) and (8) of the section 45 of the interpretation Act, 2009 (Act 792) shall apply.

Allowances

14. Members of the Agency shall be paid the allowances approved by the Minister.

Conduct of business of a Co-operative Credit Union

Registered office and records.

15. (1) A Co-operative credit Union shall have an office with a registered address.

(2) A Co-operative credit Union shall, by notice in writing, communicate a change of office or postal address to the Registrar and the agency.

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(3) A Co-operative Credit Union Shall keeps and maintain at its registered office.

(a) The by-laws of the Co-operative credit Union;

(b) The list of current and past members of the board of the Co-operative Credit Union and their last know n addresses;

(c) the list of current and past members of the committees of the Co-operative Credit Union and their last known addresses;

(d) the register of members of the Co-operative Credit Union and their last known addresses;

(e) the register of the shareholding of members of the Co-operative Credit Union ;

(f) the statement of deposits and loans to members ;

(g) minute book of general meetings of the member of the Co-operative Credit Union;

(h) minute book of the meetings of the board of directors and committees of the Co-operative Credit Union;

(i) audited financial statements of the Co-operative Credit Union ;and

• any other document that the Registrar may direct or the bank considers necessary

(4)  The following persons may, during business hour, enter the premises of a Co-operative Credit Union to inspect documents list in sub regulation (3)

• the Registrar ;
• a member of the Agency ;
• a representative of Co-operative Credit Union association appointed under regulation 8(1)(d);
• a representative of the Bank ;o r
• an auditor of the Co-operative Credit Union.

(5) A member of a Co-operative Credit Union may during business hours, enter the premises of the Co-operative credit Union to inspect the following document:

• the by-laws of the Co-operative Credit Union;

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• the list of current and past members of the board of directors of the Co-operative Credit union and their last known addresses;
• the register of members of the Co-operative Credit Union and their last known addresses;
• the register of the shareholding of members of the Co-operative credit Union ;and
• Audited financial statements of the Co-operative Credit Union.

(6) A Co-operative Credit union that contravenes sub regulation

(1), (2) or (3) commits an offence and is liable on summary conviction to a fine of not less than one hundred penalty units and not more than five hundred penalty units.

(7) in the case of a continuing offence ,to a further fine of twenty penalty units for each day during which the offence continues after the Agency has served a written notice on the co-operative Credit Union.

(8) Person who obstructs any of the persons listed under sub regulations (4) from inspecting a documents listed under sub regulations (3) Commits an offence and is liable on summary conviction to a fine of not less than five hundred penalty units and not more than two thousand penalty units or to imprisonment for a term of not less than three years and not more than five years or to both the fine and imprisonment.

Financial Standards

16. (1) The Agency shall, with the approve of the Bank in consultation with a Co-operative Credit Unions Association appointed under regulation 8 (1) (d), issues Financial standards to govern the activities of the Co-operative Credit Union.

(2) The financial standards issued under sub regulation (1) includes

(a) the minimum capital adequacy ratio required to be maintained by a co-operative Credit Union; and

(b)the secondary reserve ratio required to be maintained by a Co-operative Credit Union .

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(3) The Agency shall publish the Financial Standards in the Gazette and in at least two newspaper of nation circulation.

(4) The Financial Standards are building after they have been published in accordance with sub regulation (3).

(5) A Co-operative Credit Union shall, in the conduct of its business, comply with the financial standards.

(6) A Co-operative Credit Union that contravenes the Financial Standards issued under sub regulation (1) Commits an offence and is liable on summary conviction to a fine of not less than one hundred penalty units and not more than five hundred penalty units.

Deposits

17. (1) A Co-operative Credit Unions shall ensure that a member of that Co-operative Credit does not hold more than ten percent of the deposit of the co-operative Credit  Union  except with the prior written approval of the Bank.

(2) A Co-operative Credit Union may pay different rates of interest on deposits taking into accounts.

(a) the type of accounts;

(b) the amount of money deposited;

(c) the term of the deposit ;and

(d) any other factors that the Co-operative Credit Union considers relevant for the provision of Competitive service.

Loans

18. (1) A Co-operative Credit Union shall grant loans in compliance with these regulations, the policy of the Co-operative Credit union and Financial Standards.

(2)The Board of Directors of a Co-operative Credit Union shall, in writing, establish policies for the grant of the loans, including

(a)  the criteria for the grant of the loans;

(b)  the conditions for the repayment of the loans;

(c) the maximum amount of money which may be granted as  loan; and

(d) the forms for security for loans.

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(3)  Subject to the by-laws of a Co-operative Credit Union, a Co-operative Credit Union shall not grant a loan unless

(a)  the loan is executed under a formal contract in writing; and

(b)   the loan is secured or guaranteed.

(4)    A Co-operative Credit Union shall not grant to a member of that Co-operative Credit Union, a loan which is in excess of ten percent of the asset of the Co-operative Credit Union.

(5)     A Co-operative Credit Union may grant a loan on the security of its own shares.

(6)     A co-operative Credit Union may

(a) create a change on the shares, deposits, accrued dividends and interest of a member or a former member in respect of debt due to the Co-operative Credit Union; and

(b) use the amount of money credited to the account of a member or former member to offset any debt owed to the Co-operative Credit Union.

(7)     Subject to prior claim by the Government and any claim in respect of rent, a debt owed by a member or a former member to a Co-operative Credit Union is the first charge on

(a) crops or other agricultural produce raised in whole or in part by means of a loan obtained from the Co-operative Credit Union; or

(b) cattle, fodder, agricultural or industrial implements or raw materials for manufacture, stores, inventory or stock for sale purchased in whole or in part by way of a loan obtained from the Co-operative Credit Union.

(8)     This regulation does not affect the claim of a bonafide purchaser or transferee for the valve without notice of the claim of the Co-operative Credit Union.

(9)     A Co-operative Credit Union may charge different rates of interest on loans taking into account

(a) the risk involved in the business for which the loan is granted

(b) the amount of money  involved;

(c) the period for repayment of the loan;

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(d) the security for the loan; or

(e) any other factors that the Co-operative Credit Union considers relevant to the repayment of the loan.

(10)  For purposes of this regulation, a loan is not an investment.

(11)   A Co-operative Credit Union that contravenes subregulation (1), (2), (3), or (4) commits an offence and is liable on summary conviction to a fine of not less than one hundred penalty units ant not more than five hundred penalty units.

Investment

(19)     (1)   A Co-operative Credit Union may invest part of its funds

(2)   Where a Co-operative Credit Union decides to invest part of its funds, the Co-operative Credit Union shall invest in

(a)  deposit in the Co-operative Credit Unions Association;

(b)  shares of the Co-operative Credit Unions Association;

(c)   bank deposits;

(d)  treasury bills and bonds issued by the Government of Ghana; or

(e)   any other investments approved by the Agency in consultation with the Co-operative Credit Unions Association.

(3) The aggregate investment of a Co-operative Credit Union in investment from other Co-operative Credit Unions shall not exceed one percent of the assets of the Co-operative Credit Union.

(4)  Despite sub regulation (1), a Co-operative Credit Union may invest in real property and equipment for the purposes of the conduct of the business of the Co-operative Credit Union.

Reserves and dividends

20. (1) A Co-operative Credit Union shall, at the end of each financial year, pay into the Central Finance Facility, an amount that is equivalent to five percent of the total assets of the Co-operative Credit Union.

(2)  A Co-operative Credit Union shall establish and maintain a statutory reserve fund consisting of at least twenty-five percent of the annual profits of the Co-operative Credit Union.

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(3)  A Co-operative Credit Union may pay dividend out of the remainder of the annual profit, any retained earnings or reserves remaining form the previous year which are available for distribution.

(4)  A Co-operative Credit Union shall not

(a) pay dividend in cash in excess of fifty percent of the annual profit of the Co-operative Credit Union without the prior approval of the Agency; or

(b) pay out dividend in cash or repay shares

(i)          if the Co-operative Credit Union does not meet the minimum capital Financial Standard developed by a Co-operative Credit Union Association appointed under regulation   8 (1)(d) to which that Co-operative Credit Union is a member; or

(ii)        if the payment may cause the Co-operative Credit Union not to   meet the minimum capital requirement in the Financial Standard   developed by a Co-operative Credit Unions Association.

(5)   A Co-operative Credit Union that contravenes sub regulation (1), (2) or (4) commits an offence and is liable to an administrative penalty of not more than five hundred penalty units.

Borrowing by Co-operative Credit Union

21. (1) A Co-operative Credit Union may borrow money but may only do so in accordance with a resolution passed by a two-thirds majority of the directors of the Co-operative Credit Union.

(2) A Co-operative Credit Union shall not borrow in excess of forty percent of the assets of that Co-operative Credit Union.

(3) A Co-operative Credit Union shall not grant a security interest in its property expect with the prior written approval of the Co-operative Credit Unions Association to which it is a member.

(4) Sub regulation (3) does not apply to the grant of a security interest in the property of a Co-operative Credit Union to Co-operative Credit Unions Association.

(5) A Co-operative Credit Union that contravenes sub regulation (1) or (2) commits an offence and is liable on summary conviction to a fine of not less than one thousand penalty units and not more than two thousand-five hundred penalty units.

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Application of section 25(3) to (6) of Act 792

22. Section 25(3) to (6) of the Interpretation Act, 2009 (Act 792) applies where a Co-operative Credit Union is convicted for an offence under these Regulations.

Miscellaneous provisions

Interpretation

23. In these Regulations, unless the context otherwise requires,

“Agency” means the Co-operative Credit Unions Supervisory                                                                                                          Agency established under regulation 7;

“allowance” means a payment made to a member or an officer of a Co-operative Credit Union who attends a meeting related to the business of a Co-operative Credit Union or a retainer;

“Board” means the rules the Board of Directors of the Bank, as specified under section 8 of the bank of Ghana Act, 2002 (Act 612);

“by-laws” means the rules of a Co-operative Credit Union registered in accordance with the law that provides for the registration of Co-operative Credit Unions;

“capital” includes

• the share capital of a Co-operative Credit Union,

issued or outstanding;

• retained earnings; and
• reserves that do not represent definite obligations for future payment and excludes reserve for loan losses other than general reserves;

“Co-operative Credit Union” means a co-operative credit union which is  registered and incorporated under section 5 and 6 of the Co-operative  Societies Act,  1968 (N.L.C.D. 252) and licensed by the Bank in accordance   with the Act;

“deposit” includes a fixed term deposit, a notice deposit and   payroll deposit

“director” means a member of a board of directors Co- operative Credit  Union

“dividend” means a distribution of the profits or retained earnings or reserves  of a Co-operative Credit Union in equal proportions to the number of shares  held a member out of the shares issued by the Co-operative Credit Union;

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“Financial Standards” means the standards issued under regulation 16 to govern the operations of Co-operative Credit Unions;

“Inter-Credit Union network” means the relationship between a credit  Union and the national association of that Co-operative Credit Union;

“loan” includes loans secured by real property or personal property;

“member” means a person who has met the membership requirement of a Co-operative Credit Union;

“Minimum capital adequacy ratio” means a ratio expressed as a  percentage of the adjusted capital base to the risk weighted financial exposure.

“Registrar” means the Registrar of Co-operative Societies;

“Secondary liquid asset resource” means the total investment in government securities made by a Co-operative Credit Union, as a ratio of total deposits received by that Co-operative Credit Union; and

“smart card” means a pocket-sized card with embedded integrated  circuits which may have contact or contactless interfaces with the ability to identify, authenticate and process transaction for the                                                                     purpose of loading and storing cash or funds, or making payments.

SETH TEKPER

Minister responsible for Finance                                                       

1. H. A.K. WAMPAH

Governor, Bank of Ghana

Date of Gazette notification: 30^th October, 2015.

Entry into force: 11^th December, 2015.