Section 7October 21, 1997, Sec./Art. 7

Powers of Associations. – The Association shall accept deposits from and grant loans only to its members, subject to such rules and regulations as the Monetary Board may promulgate to ensure sound, stable and efficient operation: Provided, That no deposits shall be sourced or deducted from the loans granted to a member without his or her written consent.

The loans shall not exceed the members' deposits and contributions in the Association, plus twelve (12) months of his regular salary as the Association may allow or seventy percent (70%) of the fair market value of any property acceptable as collateral on first mortgage that he may offer as security: Provided, That no loan shall have the maturity date of more than five (5) years, except loans on the security of unencumbered real estate for the purpose of home building and home development, which may be granted with maturities not exceeding twenty-five (25) years, and medium and long-term loans to finance agricultural projects, subject to regulations prescribed by the Monetary Board: Provided, further, That the treasurer, cashier, or paymaster of the office employing a member is required, notwithstanding the provision of any existing law, rule and regulation to the contrary, to make deductions from his salary, wage, income or retirement pension pursuant to the terms of his loan, and all other deductions authorized by the member, to remit such deductions to the Association concerned, and to collect such reasonable fee for his services as may be authorized by rules promulgated by the Monetary Board.

In addition to the powers granted it by this Act and existing laws, any Association may:

a) charge reasonable interest and collect such necessary fees and charges incidental to the grant of loans;

b) invest its funds in any sound non-speculative enterprises as well as in bonds, security, and other obligations issued by the Government of the Philippines, or any of its political subdivisions, instrumentalities, or corporations including government-owned or -controlled corporations, subject to the rules and regulations of the Monetary Board;

c) allow members to participate in the profits of the Association;

d) borrow money or incur such obligations not exceeding twenty percent (20%) of the total assets of the Association, from any lending institution. The Monetary Board, may, in meritorious cases, raise the ceiling on the borrowing capacity of an Association to an amount not exceeding thirty percent (30%) of its total assets: Provided, That any such Association organized by employees of an entity or corporation may borrow funds from said entity or corporation but not vice-versa: Provided, further, That the number of the Association's creditors shall not exceed nineteen (19) at any one time;

e) maintain deposits with banks: Provided, That the amount of such deposits shall be subject to the loan limit to a single borrower as prescribed herein or by other special laws or regulations;

f) require the employer-entity or corporation to provide it with adequate office space within which it can conduct its business; and

g) engage in death benefit program meant exclusively for the mutual benefit of its members.