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Federal financial institution regulators, including the NCUA, Wednesday issued interagency lending principles for offering responsible small-dollar loans. This guidance comes after the regulators in March encouraged financial institutions to offer small-dollar loans to consumers and small businesses impacted by the coronavirus pandemic.

The regulators, which also include the FDIC, Office of the Comptroller of the Currency and Federal Reserve, outlined their “Core Lending Principles," which include:

• ensuring loan products are consistent with safe and sound banking, treating customers fairly, and complying with applicable laws and regulations;
• financial institutions effectively managing the risks associated with the products they offer, including credit, operational, and compliance; and
• offering loan products that are underwritten based on prudent policies and practices governing the amounts borrowed, frequency of borrowing, and repayment requirements.

Also included in the lending principles are reasonable loan policies and sound risk management practices and controls.

NAFCU is working closely with the NCUA to identify areas of relief for credit unions throughout the coronavirus pandemic and will continue to advocate that the agency do more to ensure institutions can meet the urgent needs of members.