Loans by credit unions

(1) A credit union may make advances by way of loans to its members for a provident or a productive purpose. (2) Subject to this Act and the Rules, every loan must be approved in accordance with the policies established by the directors before any funds are advanced. (3) Subject to any restrictions that may be prescribed in the Rules, a credit union may take any security for loans that it considers advisable and in keeping with sound business (4) Except for a loan to another credit union or cooperative, no loan may be made to a person who is not a member of that credit union, provided that a credit union established with the object of facilitating the operations of other credit unions may make loans to and take deposits from the members of such other credit unions or cooperatives. (5) Directors, committee members and employees shall not receive loans on terms and conditions more favourable than to other members; no director, officer, employee, or member of a Credit, Supervisory or Education Committee shall be allowed to borrow in excess of the value of his shares and deposits unless with proper collateral and upon the unanimous vote of a majority of the other members of the Board of Directors, the Credit Committee and the Supervisory Committee sitting together. (6) No employee, officer or director shall be present at or participate in a meeting when his application for a loan or the application of any person who is a part of his immediate family 42 Credit Unions Act or with whom he has a business or fiduciary relationship, is being considered. (7) A loan made in contravention of sub-sections (1) to (6), shall be void and shall be immediately repaid to the credit union. (8) Any person who knowingly approves or grants a loan in contravention of this Act or the Rules shall be liable for any losses resulting to the credit union in connection with that loan. (9) A borrower may repay his loan in whole or in part on any day on which the office or branch of the credit union is open for (10) Nothing in this section prevents a credit union from requiring insurance for the security of the loans it approves. (11) Interest rates on loans or any class of loans made by a credit union shall be determined at a percentage on the unpaid balance by the Board of Directors at any meeting of the board. (12) Where a borrower has not paid the interest on his loan for the period determined in the Rules, the credit union shall not include that interest in income. (13) Where a credit union is reporting loans in the balance sheet in its annual financial statements, it shall report the loans at their net realizable value after deducting the allowance for doubtful loans pursuant to section 51(6) and (7). (14) Any advance given by way of overdraft or line of credit is deemed to be a loan for the purposes of the balance sheet and must be reported as a loan. CAP. 104.