THE CREDIT-UNION BANKS 55 



desires to obtain a mortgage on his property gives a 

 bond to the Union and receives the loan, not in cash 

 but in bonds (Obligationer) issued by the Union. The 

 receiver of these bonds must realise them by selling 

 them on the money-market. Therefore the person to 

 whom the loan is granted must bear the risk of the 

 bonds not realising, on account of the fluctuations of 

 the market, as much as he had expected to receive 

 when he decided to take up the loan. 



The interest and the sinking-fund charges that 

 every member has to pay on his loan are used to meet 

 the payments of interest and to cover the sinking- 

 fund on the bonds issued by the Credit Union. The 

 regulations of the Credit Unions must be approved by 

 Government, and Government appoints an auditor to 

 inspect the affairs of every Credit Union. 



The Credit Unions will advance loans up to half 

 the assessed value of any given property. 



The person who obtains a loan has to pay a certain 

 amount towards the reserve fund of the Credit Union 

 by which it is granted. Also he must pay a small 

 sum towards the administration expenses of the Union. 

 In case of any losses being incurred, such losses are 

 met out of the reserve fund. If the reserve fund 

 should not be sufficient to cover the losses, these must 

 be met by the members, the liability being equally 

 divided among such members. 



The members are jointly and severally responsible 

 for the obligations of the Union. Only their real 

 property is, however, liable ; their other possessions 

 are not liable. 



These Credit Unions are specially adapted to a 

 country where small-holders are numerous. 



