2023 Laws of Puerto Rico › TITLE SEVEN - Banking (§§ 1 — 3116) › PART III - Other Financial Institutions (§§ 551 — 1390) › Chapter 86 - Cooperative Savings and Credit Associations Act of 2002 (§§ 1361 — 1371b) › Subchapter VI - Operating Capital, Loans and Limitations (§§ 1366 — 1366i) › § 1366b - Granting of loans

(a) Lending policies. — Cooperatives shall grant loans according to the lending standards established by their Board, which shall not be incompatible with the practices used in the administration of financial institutions that are recognized as sound practices, and in protection of the public interest. Said lending policies shall include:
(1) Adequate and objective processes for the evaluation and measurement of credit risk, giving attention to the special nature of the different types of financing;
(2) sound, generally-accepted practices for the evaluation and granting of credit in the financing industry, enabling the provision of special but prudent standards that shall enable access to credit by persons with limited resources;
(3) price policies or interest rates that recognize different levels of credit risk;
(4) standards for the acceptance of collaterals and the documentation and procedures for the due constitution and formalizing of applicable liens, and
(5) credit evaluation policies and procedures specifically adopted for commercial financing and the designation of commercial credit officials that are duly qualified for said function.
Regardless of the guarantees and collaterals offered, no cooperative shall grant a loan to any person unless the existence of reliable sources for the repayment thereof, as agreed, is confirmed and documented, which sources can be sufficient assets deposited in the cooperative and withheld by it, including liquid assets as provided in § 1326b of this title, in the case of non-members.
Lending policies shall be revised periodically to ensure their adequacy in view of market fluctuations, delinquency trends of the portfolio, the quality of the assets of the institution and the need to maintain a competitive position.
(b) Documentation of loans. — Every loan application shall state the necessary and pertinent information for its evaluation. It shall also include sufficient data, without it being construed as a limitation, to expedite the procedure to verify the identity, location, and address, credit history, place of business, sources of income and employment or work of the applicant and of the guarantors or co-signers, as well as the guarantees offered.
The loans granted by cooperatives shall be evidenced by a legitimate collateral note and any other documents that are required by the cooperative, which shall meet the requirements and guarantees required by the Corporation through regulations. The signors of the notes, whether they are members of the cooperative or not, shall be deemed, for all legal effects and purposes, as principals and jointly liable debtors, against whom the cooperative may proceed in its collection efforts, including legal means, against any of them, at its discretion. Any sum of money owed to a cooperative by a partner, or non-partner, on any account, including the payment of service charges, overdrafts, or any other reason, shall be deemed as a contingent liability and shall be recoverable by the cooperative in any court of competent jurisdiction, and be susceptible to the statutory lien provided in subsection (c) of this section.
(c) Statutory liens and non-attachable nature of assets. — Capital stock, deposits and other assets held by every debtor or guarantor in the cooperative, shall be encumbered by legal means without need of any formality, document, procedure, nor registry up to the limit of all debts contracted or secured by said cooperative, as long as these debts subsist in whole or in part. It is expressly provided that with regard to debts contracted with the cooperative, the lien on all capital stock, deposits and other assets held by debtors in the cooperative is exempted from the requirements for the constitution of chattel mortgages provided in any other act, including §§ 401 et seq. of Title 19, also known as the “Business Transactions Act”, and the Civil Code of Puerto Rico of 1930, as amended. The express power of the cooperative, at its full and exclusive discretion and selection, to impute [sic] the stock, deposits and other assets of the debtors or guarantors against any debts, commitments and obligations they maintain with the cooperative is also recognized.
It is further provided that said capital shares, deposits and other assets shall not be subject to attachment to settle a debt different to that contracted with the cooperative up to the amount of the obligation contracted with the cooperative up to the amount of the obligation contracted with the cooperative [sic] at the moment of sentencing.
(d) Granting credit to members of the board of directors, and executive officials. — Subject to the regulations of the Corporation, the board of each cooperative shall establish the institutional policy that shall govern with regard to form, the terms and conditions for the granting of loans to the members of the boards of directors and executive officers and the employees thereof. It shall likewise establish the procedures for the control and supervision of the loans that are granted to them.
Said institutional policy, as well as the procedures for its implementation, shall establish adequate controls so that the members of the boards of directors, officials and employees shall not participate [in] the process for the approval, control and supervision of their own loans, nor receive privileges by virtue of the position they hold in the cooperative, and shall establish the sanctions to be imposed for any violation of said institutional policy. The institutional policy may authorize discounts or reasonable concessions for the employees of the cooperative, provided they are consubstantial with similar programs in other financial institutions.
(e) The Corporation shall have the power to define by regulations the maximum number of loans that may be granted to a single borrower. Said limitations shall be comparable to those that apply to depositary institutions that operate in Puerto Rico.
History —Oct. 28, 2002, No. 255, § 6.03.