Which statement is not a characteristic of Financial Service Cooperative?

Which statement is not a characteristic of Financial Service Cooperative?

• A. The Net Worth of the Financial Service Cooperative shall, at all times, not be less than an amount equal to eight percent (8%) of its risk assets.
• B. Financial Service Cooperative shall maintain a Liquidity Reserve Fund that will be restricted in nature equivalent to at least two percent (2%) of their savings and time deposit liabilities.
• C. Only those cooperatives with minimum Paid-up capital of at least Ten Million pesos (Php 10,000,000.00) shall qualify to register as Financial Service Cooperative.
• D. An Elective Officer may be removed by 2/3 vote of the regular members present and constituting a quorum in a regular or special general assembly meeting called for the purpose.

Answer: (D)

Financial Service Cooperatives are defined by clear financial thresholds that ensure safety and soundness: the organization must keep net worth at a level that protects members, maintain a liquidity reserve fund to meet withdrawal needs, and meet a minimum paid-up capital to demonstrate substantial capitalization. These provisions are about financial health and stability, which is why statements about 8% of risk assets for net worth, a 2% liquidity reserve relative to deposits, and a substantial minimum paid-up capital are all characteristic requirements. The governance rule about removing an elective officer, however, is not described as a fixed financial-characteristic requirement. Officer removal is governed by the cooperative’s by-laws and applicable law, and it involves due process, notices, and the proper voting procedure as specified in those by-laws. It is not universally defined as a 2/3 vote of regular members present in a general assembly for removal. Therefore, this option does not fit the regulatory characteristics that define Financial Service Cooperatives, making it the statement that is not a characteristic.

Financial Service Cooperatives are defined by clear financial thresholds that ensure safety and soundness: the organization must keep net worth at a level that protects members, maintain a liquidity reserve fund to meet withdrawal needs, and meet a minimum paid-up capital to demonstrate substantial capitalization. These provisions are about financial health and stability, which is why statements about 8% of risk assets for net worth, a 2% liquidity reserve relative to deposits, and a substantial minimum paid-up capital are all characteristic requirements.

The governance rule about removing an elective officer, however, is not described as a fixed financial-characteristic requirement. Officer removal is governed by the cooperative’s by-laws and applicable law, and it involves due process, notices, and the proper voting procedure as specified in those by-laws. It is not universally defined as a 2/3 vote of regular members present in a general assembly for removal. Therefore, this option does not fit the regulatory characteristics that define Financial Service Cooperatives, making it the statement that is not a characteristic.