Newsletter No. 18

No.18 May 1991 CUHK Newsletter Is It Possible to Apply for Additional Loans, or for More Than the Maximum Credit Limit? The answer is yes. If a member applies to borrow an amount which exceeds his maximum credit limit, the credit committee will take various factors into consideration, such as reasons for the loan, financial credibility and the savings history of that member, before coming to a decision. Should a member require further financial assistance whilst still repaying an existing loan, he may apply for an additional one as long as he has repaid at least half of the previous loan. The value of the second loan will be the maximum credit limit minus the unpaid balance of the previous loan. What Are the Terms of Repayment? The borrower can decide on the repayment period, provided that this does not exceed 36 months. There is no problem if the borrower wishes to pay back the loan prior to the date of maturity, and in cases of financial difficulty, an extension of the repayment period may be applied for. A ll loans made by the credit union have been insured against default, and in the unfortunate circumstance of the death of a member, the insurance company will pay their outstanding liabilities, releasing the family from the responsibility of repaying the loan. Are There Any Other Benefits to Joining the Credit Union? Firstly, the credit union has purchased life insurance policies for every member, so that in the event of the death of a member, their bene f i c i a ry wo u ld receive compensation from the life insurance company. The amount of compensation awarded will be equivalent to the deposit balance of the deceased at the credit union, subject to the following conditions: (1) The ma x i mum compensation is HK$ 18,000 for any member who dies at the age of 54 or below. (2) The amount will decrease as the age increases. No compensation will be given for those who die at the age of 70 or above. Secondly, even after a member has retired or resigned from office at the University, they may still retain their membership of the credit union, and enjoy all of the same benefits as long as they continue to fulfil their membership obligations. Case Histories Member A A Terms of Service B staff member joined the credit union when it was first established. He applied for two loans, both of which were approved. The first loan was for HK$20,000, which he used to cover the funeral expenses of one of his parents, and which he managed to repay within one year. The second loan was also for $20,000, and with this money, he purchased a flat. Because Member A finds that the credit facilities which the CUECU offers are very helpful in times of financial difficulty, and the terms of repayment are also very favourable, he would like to encourage more of his colleagues to join the credit union. Member B This staff member, who is employed by the University under Terms of Service C, lives on campus, and has no family or relatives in Hong Kong. He makes a point of depositing HK$ 1,000 amonth in the credit union, and also receives a loan from them, although there is no real need for it. However, he feels that no great harm can come from borrowing money from the credit union since he will not be responsible for repaying it in the event of his death. Further Useful Information about the CUECU - CUHK is the only local tertiary institution with a credit union for staff members. - The CUECU is registered with the government's Agriculture and Fisheries Department. Although at first sight this may appear to be a completely irrelevant link, the justification for including it under the jurisdiction of that department is that the credit union is managed in a manner similar to an agricultural cooperative. - When it was first set up, the CUECU was housed in a small room beneath the staircase on the first floor of the Sui-Loong Pao Building. It was not until the completion of the John Fulton Centre that it was able to secure a presentable office in the centre. -Loansare usually secured for the purposes of getting married, purchasing new flats, fitting out one's home, as well as meeting urgent needs. - Since its inception, the credit union has granted loans totalling over HK$9,800,000, and has so far no record of bad debt. a To secure a loan, an ordinary member of the credit union needs only obtain the approval of the credit committee. But as a director or a member of the supervisory committee of the CUECU, his application has to be vetted by a combined meeting of the board of directors, the supervisory committee and the credit committee. - The credit union sets aside 20 per cent of the net annual profits as a reserve fund, and distributes the remainder to members as dividends. In the past three years, the net profit has increased remarkably, but the dividend rate is restricted by law not to exceed six per cent per annum. How is it possible then for the credit union to return all 80 per cent of the net profit to the members? Last year the board of directors resolved this problem by buying cake coupons for members with the rest of the profits, to make up for the shortfall created by the six per cent restriction. Suggestions for this year's profit-sharing are welcome! 5