Development Best Practices in Credit Union Supervision: Credit Committee/Loan Officer Duties and Responsibilities

How do the roles of loan officers and credit committees in a credit union complement each other?
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This paper discusses the duties and responsibilities of the credit committee (CC) and loan officers (LOs). It presents the following information about CCs and LOs:

  • The CC usually consists of 3-5 people;
  • Some countries allow the CC to delegate their powers to LOs;
  • In new or small credit unions, the CC is usually capable of making loan decisions;
  • As credit unions grow and expand the number of products offered, they should employ professional LOs.

The paper lists the duties of the LO, some of which are:

  • Interviewing loan applicants, obtaining necessary documentation to make the loan decision, securing the collateral used to qualify for the loan, and approving the loan;
  • Granting loans according to credit union policy and in compliance with the local laws;
  • Participating in training to improve loan underwriting skills;
  • Evaluating the credit union's lending performance annually.

The paper lists the CC job prerequisites and concludes by listing the CC's responsibilities, some of which are:

  • Reviewing applications for loans and making decisions about them based on the loan policies of the company;
  • Providing financial counseling to members on the wise use of credit;
  • Reviewing credit union loan and collection policies along with performance.

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