Anyone who has ever been to a bank to apply for a loan knows that simply filling out an application is not enough. You need to prove your creditworthiness, sometimes invite a co-applicant, bring various certificates. The decision to refuse or approve the loan then takes some time, because it is often not just the bank employee to whom you have given everything, but the credit committee that decides.
How does the Credit Committee work?
The Loan Committee considers loan applications that are not within the jurisdiction of the Bank’s loan officer or those that require special attention.
Obtaining such a loan is then preceded by a review of the application by members of the credit committee, which consists of senior managers or executives and experienced financial managers. They will recommend a course of action that is consistent with the Bank’s standard lending policy.
How is a credit committee different from a loan committee?
While the credit committee is set up by the banks, the credit committee is a matter for the cooperatives. It is elected by the credit union’s membership meeting from among the credit union’s members. The committee then decides on:
- Provision of loans to members according to the statutes
- Providing guarantees in the form of a surety or financial guarantee for members
- Securing loans
- It may also delegate part of the exercise of its powers to other persons in predetermined cases. However, this must be stated in the statutes of the Commission, as well as the manner in which this is to be done.