A study on the loan procedure of the cooperative lending scheme of Land Bank of the Philippines

• Main Authors: Gonzalez, Adolfo Martin, Lam,, Cheak Yee, Lim, Therese Hazel, Maranon, Gregory
• Format: text
• Language: English
• Published: Animo Repository 1991
• Subjects: Banks and banking, Cooperative; Agricultural credit; Land Bank of the Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/17289
• Institution: De La Salle University

This research is entitled A study on the Loan Procedure of the Cooperative Lending Scheme of Land Bank of the Philippines . It seems to qualitatively evaluate the cooperative lending scheme of the Land Bank in terms of Philippine banking standards and practices. The lending scheme will be evaluated in the following area: cooperatives eligible for the scheme, credit risk acceptance criterion, the measures taken upon non-compliance of credit terms. In conducting the study, the researchers came up with four hypotheses: 1. The basic requirement by the Land Bank are not similar to that of commercial banking standards.2. The Land Bank does not strictly follow the 5 C's of credit for loan evaluation.3. The Land Bank closely monitors the cooperative during the term of the loan.4. The Land Bank is flexible with the terms and payment condition when cooperatives cannot pay upon maturity of the loan. The researchers used a qualitative type of analysis in answering the hypotheses. A comparative analysis will also be undertaken, comparing Land Bank with theories and practices of commercial banks and the 5 C's of credit namely: character, capacity, condition, collateral and capital. The researchers concluded that lending to cooperatives involves high risks and the Land Bank should adopt policies to decrease the risks involved. The Land Bank should follow commercial banking standards and practices in evaluating and processing loans. If Land Bank does not expose the farmers to this standard and practices, the cooperatives will have a difficult time in borrowing from other banks, because of the special treatment the Land Bank gives them. Someday the Land Bank may not have the funds to finance cooperatives and these cooperatives must go to other banks for credit. The researchers recommend that the Land Bank should require cooperatives to submit three years of financial statements rather than just one year. Another recommendation is to strengthen collateral, capacity, capital and character of the cooperatives. The researchers also recommended that Land Bank should make cooperatives more independent by having stricter penalties while giving directors and officers more responsibility in handling the money in the future.