KINAMBA SOCIETY LOAN SCHEME FOR MEMBERS Introduction:

Following a lengthy discussion of the loan scheme, the members have in principle decided to initiate a scheme to loan members money from the societys pool in order to assist members financially. It was agreed that the loan scheme will be rolled out in October 2009. The Society will set aside a loan fund and ensure availability of funds whenever members require financing. Loan Rules and Regulations: 1. To qualify to access a loan from the society a member must be fully paid up. He/She must have cleared with the treasurer on all contributions, welfare payments, fines and penalties, top up funds or any dues owed to or agreed upon during a duly constituted meeting. 2. To qualify to be granted a loan, a member must have attended at least 3 monthly meetings in the last six months preceding the date of application. In case more members apply for a loan and the amount set aside is not enough to grant loans to all the applicants, those who will have attended more meetings will be considered first. 3. There shall be a loans officer who will be elected from among the members and whose main duty will be processing of loan applications. 4. A 4 member loans committee will be constituted and will be required to meet at least quarterly to review the performance of all the loans granted. The loans officer will be a member of this committee. 5. Members requesting for a loan from the Society must fill up loan application forms as appropriate. Process for loan application will be as follows: a) Fill a standard application form and pay the application fee. b) Submit the form to the loans officer for appraisal and approval.. c) If the member fulfills all the conditions, then the loan will be granted immediately. 6. Issue of loans will be done on a first come first served basis subject to availability of funds. 7. Loan rules: a) Initially a member will qualify to borrow up to 50% equivalent of his/her shares. 2nd loan can be granted equivalent to 65%. The highest amount of loan that can be granted is at 80%. No new loans can be issued prior to completing payment of any previous loans b) A members paid up shares will be used to guarantee any loan granted to him/her if he borrows an amount equivalent to 50% of his shares. If he borrows an amount equivalent to 65% of his shares an additional one (1) guarantor from the existing fully paid up members will be required. If he borrows an amount equivalent to 80% of his shares an additional two (2) guarantor from the existing fully paid up members will be required. In the event that a members contribution is not sufficient to clear an outstanding

c) d) e)

f)

g)

loan, the guarantors will be obligated to pay on behalf of the defaulter. There will be an administration fee of Kshs.100 to process the loan. This must be paid when applying for loan and is nonrefundable Interest rate is fixed at 10% on a flat rate paid in full regardless of the period of repayment. The loan plus monthly interest will be repaid within a maximum period of 6 months after borrowing in six (6) equal monthly installments. However a member may opt to clear his outstanding balance plus interest at any time during the period. When a loan is granted, the first repayment will fall due during the next monthly meeting provided the meeting is held later than 1 month after the date of granting the loan. Subsequent repayments will fall due after every 1 month from the date of the first repayment or during the next monthly meeting. If no monthly meeting is scheduled for any month, a member will still be required to submit his repayment. If a member who has been granted a loan defaults on any monthly payment, the outstanding balance plus interest will be subjected to compound interest after every month up to a maximum period of six months after which the society will recover the balance from the members shares and /or the guarantors. Any unrecoverable interest will be written off.