NCUA, along with other federal financial institution regulatory agencies Wednesday issued principles for offering small-dollar loans in a responsible manner to meet financial institutions customers' short-term credit needs.
NCUA, the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency “recognize the important role that responsibly offered small-dollar loans can play in helping consumers meet their ongoing needs for credit from temporary cash-flow imbalances, unexpected expenses, or income shortfalls, including during periods of economic stress, natural disasters, or other extraordinary circumstances such as the public health emergency created by COVID-19,” according to the statement released Wednesday.
According to "Interagency Lending Principles for Offering Responsible Small-Dollar Loans," responsible small-dollar loan programs generally reflect the following characteristics:
The agencies’ core lending principles for financial institutions that offer small-dollar loan products include:
Reasonable loan policies and sound risk management practices and controls for responsible small-dollar lending would generally address the following: