Question & AnswerQ&A (BSP CIRCULAR NO. 192)
An NSSLA is a non-stock, non-profit corporation engaged in accumulating savings from its members and using these funds to grant loans for household needs, including long-term home building and personal finance. It may also offer a death benefit program exclusive to its members.
Membership in an NSSLA is limited to a well-defined group of persons such as employees, officers, trustees of one company or government office, including member-retirees, and their immediate family members up to the second degree of consanguinity or affinity. NSSLA shall not transact business with the general public and shall accept deposits from and grant loans only to its members.
The articles of incorporation and by-laws of an NSSLA must be approved by the Monetary Board before registration with the SEC. The application must include articles of incorporation, by-laws, names and qualifications of incorporators and officers, an itemized financial statement, and pay a filing fee of P1,000. Grounds for disapproval include unsound financial program or redundancy of services.
Members must contribute at least One Thousand Pesos (P1,000.00) as capital to the NSSLA. Partial withdrawals are allowed unless prohibited by the by-laws, but the contribution cannot go below P1,000.00.
An NSSLA's combined capital accounts must be at least 10% of its risk assets, defined as total assets minus certain exempt assets like cash, government securities, depreciated office premises, and insured mortgage loans. Failure to maintain this ratio may result in the Monetary Board limiting profit distributions or restricting new investments.
It is a reserve equal to 2% of total capital contributions, funded from profits and invested mostly in government bonds or BSP securities. It must be adjusted when capital contributions increase and must be maintained before dividends can be declared or paid.
Trustees must be at least 21 years old, a high school graduate or have relevant experience or BSP training, and must be members in good standing. Disqualifications include convictions involving moral turpitude, insolvency, willful regulatory violations, excessive absences, delinquency in payments, or being closely related to key officers. Similar qualifications apply to officers.
No, they cannot receive commissions, emoluments, or rewards based on loan volumes or interest/fees collected. However, they may receive salaries, commissions paid to agents, and bonuses based on the profits of the NSSLA.
Loans cannot exceed the member's deposits plus 12 months salary or up to 70% of the fair market value of acceptable collateral. Aggregate loans to trustees and officers cannot exceed 20% of total capital. Loan maturities cannot exceed five years, except for home-building loans (up to 25 years) and agricultural projects. Interest accrual on past due loans is prohibited until payments are received.
Creditors must provide borrowers a clear written statement before consummating the loan, disclosing details like cash price, down payment, finance charges, total amount financed, effective interest rate, and additional charges. Violations may lead to penalties, fines, or imprisonment.