Newsletter No. 18

No.18 May 1991 Take Care of the Pence, and the CUECU Will Take Care of you Introducing The Chinese University of Hong Kong Employees' Credit Union (CUECU) In 1986, 16 members of staff from various units in the University volunteered to set up a non-profit-making cooperative, which would exist solely to invest the savings of its members’ and to provide them with a source of credit when necessary. Although its credit facilities and services are not comparable to those of a bank, the CUECU has still proved to be an invaluable organization on the campus, with many colleagues availing themselves of its services at one time or another, to tide them over the odd financial difficulty which may arise from time to time. To date, the CUECU has over 530 members. What Are the Criteria for Membership? A l l full-time employees of the University are eligible to join, as long as they pay a joining fee of HK$1, and deposit a fixed amount of money in the credit union every month. It is completely up to the individual to decide how much to deposit, and this amount can be changed at any time. Because the credit un i on is r un as a cooperative, it must abide by the rule which states that deposits must be calculated in terms of shares, each of which is currently valued at HK$5. Members should deposit a minimum of one share every month. A t the end of each financial year, the credit union will distribute dividends to its members from the ne t amount of profit it has made during the year. However, the regulations governing the credi t union state that the dividend rate should not be higher than six per cent per annum. Members can withdraw their share holdings at any time they wish to during the working week. They can withdraw part or all of their savings, with the proviso that they w i l l forfeit their dividend i f they withdraw their money before the end of the financial year. How Does One Apply for a Loan? The application procedure for a loan is simplicity itself - no mortgage is required, just the completion o f an application form wh i ch is then submitted to the credit committee via the treasurer of the CUECU. Most applications for loans are approved, as long as they are not to be used for gambling. The credit union offers loans under more advantageous terms than a ban k would offer, such as a lowe r rate of interest (currently 10 per cent per annum). The amount of interest w i ll also decrease as the amount of loan-repayment increases. A l l information about the debtor is kept strictly confidential. The credit committee usuall y meets twice a month, on the second and sixteenth days, to consider applications for loans. Urgent cases are dealt with at the discretion of the committee chairman , who will examine the application and perhaps give approval in advance. This w i ll be confirmed retrospectively at the next meetings. Occasionally, if there is a sudden influx of applications for loans, members may have to wait for awhile before receiving any credit, because one must remember that the CUECU's scale of operation is limited, and there may not be sufficient capital to satisfy the needs of all applicants at the same time. What Is the Maximum Credit Limit? A t the moment, the maximum amount that a member may borrow is HK$50,000, but the CUECU board of directors has just recently approved an amendment to the credit policy. Under this new policy, the maximum credit limit is dependent on both the applicants' length of service at the University, and the terms of service under which they are employed. No guarantor is required when applying for loans. How Is the Maximum Credit Limit Determined? A simple formul a has been drawn up to calculate the max imu m credit limit allowed to any one member, based on three factors: Maximum Credit Limit = HK$50,000; or Monthly salary x Factor related to length of service + Balance of deposit, whichever is the lower of the two figures. Factor Table Number of years of service Terms of Service A & B C 4 & below 1.5 1.5 5-6 2.0 1.8 7-8 2.5 1.8 9-10 3.0 2.0 11-12 3.5 2.0 13-14 4.0 2.0 15 & above 4.5 2.5 For example, if a member of staff earning HK$ 15,000 a month has been employed by the University for seven years under Terms of Service B, and has deposited HK$6,000 with the credit union, then the maximum credit limit that he will be eligible for is $15,000 x 2.5 + $6,000 = $43,500.