Amendments Nos. 54, 56 and 57 are related and may be discussed together by agreement. Is that agreed? Agreed. If amendment No. 54 is agreed amendment No. 55 cannot be moved.
SECTION 36.
I move amendment No. 54:
In page 33, subsection (2), to delete lines 31 to 33 and substitute the following:
"(c) by a credit officer.".
All three amendments derive from comments made by the Irish League of Credit Unions. All are designed to rectify a rather restrictive provision in the present subsection (2) which requires that a loan to a non-qualifying member must be approved by an absolute majority of the board of directors under paragraph 36(2)(a). It was pointed out to me that in many credit unions the loan applications of such members are treated similarly to those of qualifying members.
Committee members will recall that in section 17(4) a non-qualifying member was defined as someone who ceases to have the common bond required for members of that credit union. By way of example, such a member may no longer live or be employed in the locality in which the credit union is based. The purpose of these amendments is to ensure the loan applications of non-qualifying members are treated in a simpler fashion than is presently envisaged in the section. The amendment to section 36(2) simply removes the requirement that a loan to a non-qualifying member must be approved by a majority of the board of directors. However, the provision is reinserted in section 36(3) which remains subject to the following subsection (5). The change now being made to subsection (5) makes it clear that a loan to a non-qualifying member which does not exceed the value of his savings may be approved either by the credit committee or by a credit officer. This section therefore places the approval of a loan to a non-qualifying member on the same footing as the approval of a loan to an officer where the value of the loan is less than the value of the person's savings in the credit union.
It remains the case that where a non-qualifying member seeks a loan which exceeds the value of his savings, the decision on that loan application must be made by the board of directors. It is considered appropriate that this task should not be delegated for two reasons. First, a non-qualifying member is no longer a member of the community of the credit union and may not have the same commitment to that community. Accordingly, there is likely to be a greater element of risk that the member would default on such a loan and it is considered appropriate that the board of directors be left to assess this risk. Second, the credit union and, specifically, the board of directors must ensure that the total amount outstanding in respect of loans to non-qualifying members must remain at, or below, 10 per cent of the total amount outstanding of all loans made by the credit union to its members under the preceding section 35(3). The amendment to section 36(5) achieves an additional objective. This is to provide some further flexibility by requiring that the loan amounts do not have to exceed the value of savings, as distinct from the value of shares which was stipulated in the Bill as published. This will allow credit unions to take account of the shares and deposits of an officer and non-qualifying member as distinct from the value of shares in the current subsection in exempting such persons from the more rigorous loan approval procedure stipulated in subsection 3.
I missed out on amendment No. 53 to section 35 as the Chairman moved so quickly. We got carried away.
I did not get carried away. I was merely doing the business I am appointed to do. We cannot back-pedal all the time.
I have saved the Chairman a great deal of time. I have not called any divisions. In section 35, amendment No. 53 refers to backdating. We will return to the issue of loans on Report Stage. If a credit union was in excess of the limit, the Registrar or the league would have to exercise their discretion. As I understand it, a credit union will be outside the law, if that law changes, in the event that its loans are in excess of the new limit.
Did amendment No. 52 in my name deal with the Deputy's concerns in that regard?
I remain nervous about the matter.
I believe amendment No. 52 deals with the point raised by the Deputy.
Everyone agrees that where commonsense prevails, loans could be phased out over an additional payment period. Does the Minister of State understand that we are discussing matters which are written down in law?
Yes.
Under the 1966 Act there is no cap on loans. However, some credit unions have loans in excess of whatever will be the new limit. I am aware that the figure for that limit has not been decided but I merely wish to make the point now rather than returning to it on Report Stage. I want to ensure that if credit unions have loans in excess of the new limit these will not be called in until later.
They will not be affected and amendment No. 52 provides for that situation.
There will be no problem for the duration of the payment period?
No.
Will penalties or disciplines be imposed on the credit unions?
No.
Amendment agreed to
Amendment No. 55 not moved.
I move amendment No. 56:
In page 33, subsection (3), line 34, after "subsection (5)," to insert "a loan to a non-qualifying member may not be approved except as set out in subsection (2)(a) and".
Amendment agreed to.
I move amendment No. 57:
In page 34, subsection (5), line 2, to delete "which does not exceed the value of his shares" and substitute "or a non-qualifying member which does not exceed the value of his savings".
Amendment agreed to.
Section 36, as amended, agreed to.
Section 37 agreed to.