Credit Union Act 1997

Making of loans.

35

F40 [ 35. (1) ( a ) In this section large exposure , in relation to loans of a credit union to a borrower or a group of borrowers who are connected, means the total exposure (including contingent liabilities) of the credit union where the total exposure to such borrower or group of borrowers would be greater than an amount (whether expressed as a monetary amount or as a percentage of some monetary amount or determinable monetary amount) prescribed by the Bank.

( b ) For the purposes of this subsection

control has the meaning assigned to it by section 432 of the Taxes Consolidation Act 1997 and the other relevant provisions of Part 13 of that Act;

group of borrowers who are connected means 2 or more persons

(i) who, unless it is shown otherwise, constitute a single risk because one of them, directly or indirectly, has control over the other person or persons (not being individuals); or

(ii) between whom there is no relationship of control as set out in subparagraph (i), but who are to be regarded as constituting a single risk because they are so interconnected that, if one of them were to experience financial problems, the other person or some or all of the other persons would be likely to encounter repayment difficulties.

(2) A credit union may make a loan to a member for such purpose as the credit union considers appropriate, upon such security (or without security) and terms as the rules of the credit union may provide. The ability of the loan applicant to repay shall be the primary consideration in the underwriting process of the credit union.

(3) A credit union shall manage and control lending to ensure the making of loans does not involve undue risk to members savings taking into account the nature, scale, complexity and risk profile of the credit union.

(4) Every application to a credit union for a loan shall be in writing and shall state the purpose for which the loan is required and the security (if any) offered for it.

(5) A credit union shall not accept from an officer of the credit union a guarantee for a loan to another member unless that other member is the officer s spouse or civil partner, child or parent.

(6) Where the rules of a credit union so provide, the credit union may determine in accordance with those rules the total, including percentage, amount of loans (if any) that it may grant to non-qualifying members.

(7) In relation to loans to which this section relates and for the adequate protection of the savings of members of credit unions, the Bank may prescribe one or more of the following:

( a ) the classes of lending a credit union may engage in whether by reference to any common characteristic of the credit unions or loans concerned, or otherwise;

( b ) the limits on the total, including percentage, amount of loans generally, or unsecured loans or class or classes of loans, that may be lent by credit unions, having regard to period or periods of time for which loans concerned are made;

( c ) the matters relating to large exposures of credit unions and limits relating to such exposures;

( d ) the limits on the concentration of lending, including concentration limits on loan classes, including concentration limits on loans to a member of a credit union;

( e ) any other limit that the Bank considers appropriate.

(8) For the adequate protection of the savings of members of credit unions the Bank may prescribe such other requirements as it considers necessary in relation to any one or more of the following matters:

( a ) the lending practices of credit unions, including

(i) loan application assessments,

(ii) the making of provision for specified matters,

(iii) reviews to assess the adequacy of provisions,

(iv) maintaining policies for the holding of provisions, for credit and for credit control,

(v) the types of security that may be accepted;

( b ) reporting loans to the Bank;

( c ) the holding by credit unions of provisions, reserves or capital against loans or specified classes or types of loans.

(9) In prescribing matters for the purposes of this section, the Bank shall have regard to the need to ensure that the requirements imposed by the regulations made by it are effective and proportionate having regard to the nature, scale and complexity of credit unions, or the category or categories of credit unions, to which the regulations will apply.

(10) A credit union shall ensure that it has appropriate processes, procedures, systems, controls and reporting arrangements to monitor compliance with the requirements of this section and any requirement imposed under this section.

(11) Subject to its rules, in respect of a loan, a credit union may accept, in addition to other forms of security

( a ) a guarantee by a member, or

( b ) a pledge by a member of shares in or deposits with the credit union,

and, where such a guarantee or pledge is accepted, it shall be deemed to be a security for the loan. ]

Annotations:

Amendments:

F40

Substituted (1.01.2016) by Credit Union and Co-operation with Overseas Regulators Act 2012 (40/2012), s. 11(1), S.I. No. 584 of 2015, subject to transitional provisions in subs. (2).

Editorial Notes:

E26

Previous affecting provision: subs. (10) amended (1.01.2011) by Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (24/2010), s. 97(2) and sch. pt. 1 item 23, S.I. No. 648 of 2010; section substituted as per F-note above.

E27

Previous affecting provision: subss. (2)-(2F) substituted and inserted (1.10.2010) by Central Bank Reform Act 2010 (23/2010), s. 15(7) and sch. 2 pt. 7 item 2, S.I. No. 469 of 2010; section substituted as per F-note above.

E28

Previous affecting provision: subs. (2) substituted (1.11.2007) by Markets in Financial Instruments and Miscellaneous Provisions Act 2007 (37/2007), s. 17, S.I. No. 730 of 2007; section substituted as per E-note above.

E29

Previous affecting provision: subs. (2) amended (26.04.2007) by Credit Union Act 1997 (Alteration of Financial Limits) Regulations 2007 (S.I. No. 193 of 2007), reg. 2; section substituted as per E-note above.

E30

Previous affecting provision: subs. (4) amended (1.05.2003) by Central Bank and Financial Services Authority of Ireland Act 2003 (12/2003), s. 35(1) and sch. 1 pt. 24 item 18, S.I. No. 160 of 2003, subject to transitional provisions in 36 and sch. 3 para. 26; section substituted as per F-note above.

E31

Previous affecting provision: subs. (3)(a) amended (1.01.2002) by Euro Changeover (Amounts) Act, 2001 (16/2001), s. 6(g), commenced as per section; section substituted as per F-note above.