March 14, 2012

CDA MEMORANDUM CIRCULAR NO. 005-12

SECTION 1. Legal Basis.

BOA Res. No. 074, series of 2012 dated March 14, 2012 and

SECTION 2. Scope.

All credit and multi-purpose cooperatives with savings and loan services registered with the Cooperative Development Authority under

SECTION 3. Purposes.

The purposes of issuing these rules are:

1) To enhance loan protection transparency;

2) To ensure a level playing field among credit providers;

3) To protect the member-borrower from the effect of misrepresentation and concealment;

4) To permit the member-borrower fully appreciate and evaluate the real cost of their borrowings; and SEIDAC

5) To avoid circumvention of usury laws.

SECTION 4. Methods of Computing Interest on Loans Receivables.

1) The amount of interest shall be charged only based on the outstanding balance of a loan at the beginning of an interest period.

2) For a loan where principal is payable in installments, interest per installment period shall be calculated based on the outstanding balance of the loan at the beginning of each installment period.

3) All loan related documents shall show repayment schedules in a manner consistent with this provision.

SECTION 5. Definition of Terms.

Finance Charges includes interest, fees, service fees, discounts and such other charges incidental to the extension of credits.

Loans and Receivables as defined under the Standard Chart of Accounts (SCA) MC-2009-4 Series of 2009, these refer to financial assets with fixed or determinable payments that are not quoted in an active market other that Available for Sale, Held to Maturity and Investment at Fair Value through Profit and Loss.

SECTION 6. Information to be Disclosed.

As a general rule, loan terms shall be disclosed to all types of borrowers. For micro and small cooperatives with lending operations, the following are the minimum information to be disclosed:

a. The total amount of loans;

b. The finance charges;

c. The net proceeds of the loans; and

d. The percentage that the finance charge bears to the total amount of the loans. CITaSA

All credit cooperatives and multi-purpose cooperatives with savings and lending operations shall be enjoined to adopt the above stated rules.

SECTION 7. Effectivity. This circular shall become effective upon approval of the Board of Administrators and fifteen (15) days upon submission of a copy to the Office of the National Administrative Register (ONAR).

Approved this 14th day of March 2012.

(SGD.) EMMANUEL M. SANTIAGUEL, Ph.D.
Chairman
Cooperative Development Authority

ATTACHMENT

EXCERPTS FROM THE
MINUTES OF REGULAR MEETING
OF THE CDA BOARD OF ADMINISTRATORS HELD ON MARCH 14, 2012
Bohol Tropics Resort, Tagbilaran City

RESOLUTION NO. 074, s-2012

Upon motion of Adm. Felicitas S. Acosido duly seconded by Adm. Nelon B. Alindogan, be it RESOLVED as it is hereby RESOLVED to approve the Memorandum Circular on Rules Implementing

APPROVED.

xxx xxx xxx

Thus is to certify that the foregoing is true and correct from the minutes of the CDA Board of Administrators' Regular Meeting.

(SGD.) MARY GRACE I. CINCO
Acting Board Secretary IV

ATTESTED:

(SGD.) EMMANUEL M. SANTIAGUEL, Ph.D.
Chairman