Credit Unions must modernise to survive

‘Quisimos darles una sonrisa desde las alturas a los niños'

Robert Le Hunte, Min­is­ter of Pub­lic Util­i­ties has said that cred­it unions have to adapt to the mod­ern world if they are to sur­vive.

The mar­ket share of cred­it unions has shrunk by 300 per­cent over the past decade. I know we talk a lot about the growth of the move­ment from a dol­lar per­spec­tive. I re­mem­ber when I was ac­tive in the move­ment we of­ten talked about the cred­it union share of the mon­ey in the fi­nan­cial sec­tor some­where be­tween 8 and 10 per­cent.

“It was sur­pris­ing when I looked at it re­cent­ly it is now in the vicin­i­ty of 3 per cent to 4 per cent. Yes, we are see­ing our dol­lar val­ue grow­ing be­cause the mar­ket is grow­ing but as a mar­ket share, we are al­so see­ing that we are slip­ping as a per­cent­age of how much mon­ey is in the sys­tem.”

Hunte spoke on Fri­day at a post-bud­get fo­rum host­ed by the Cen­tral Fi­nance Fa­cil­i­ty (CFF) at the Kapok Ho­tel, Mar­aval.

In the bud­get state­ment read last Mon­day, the Gov­ern­ment an­nounced mea­sures that will af­fect the co-op­er­a­tive move­ment.

These in­clude the amend­ment of the Co-op­er­a­tive So­ci­eties Act of 1971 to “in­crease the cur­rent lim­it of $5,000 im­posed on the trans­fer of shares or payable in­ter­est to a nom­i­nat­ed ben­e­fi­cia­ry up­on death of a mem­ber to $50,000.”

The sec­ond mea­sure is to en­able the pay­ment of util­i­ty bills by co-op­er­a­tive so­ci­eties and cred­it unions.

The last mea­sure is the cre­ation of a “new in­de­pen­dent au­thor­i­ty to gov­ern the co-op­er­a­tive sec­tor”

Le Hunte said the cred­it union move­ment evolved from hum­ble be­gin­nings with hav­ing a few hun­dred dol­lars in as­sets to more than $15 bil­lion in as­sets to­day.

He said some of the fi­nan­cial ser­vices that cred­it unions were formed to meet are now met by oth­er fi­nan­cial in­sti­tu­tions.

“I be­lieve that the suc­cess in ser­vic­ing and broad­en­ing the base that cred­it unions have done and in demon­strat­ing how suc­cess­ful you were in be­ing able to give peo­ple loans and re­pay­ing their loans, what has hap­pened is that you are see­ing a lot of banks have ac­tu­al­ly gone af­ter those same cus­tomers.

There­fore, when we hear about loan sales and we hear about a num­ber of in­sti­tu­tions that have tar­get­ed cred­it unions’ ex­ist­ing work­ing-class cus­tomers. Those are their bread and but­ter cus­tomers and they are able now to pro­vide long term mort­gages. They are even able to pro­vide in­ter­est rates low­er than cred­it unions.”

He said the Gov­ern­ment set up an in­ter-min­is­te­r­i­al com­mit­tee in light of the Caribbean Re­gion­al Tech­ni­cal As­sis­tance Cen­tre (CAR­TAC) re­port.

“This clear­ly ar­tic­u­lates that the reg­u­la­to­ry frame­work of the cred­it union is an­ti­quat­ed and it has in­hib­it­ed the at­trac­tive­ness of the cred­it union as provider of fi­nan­cial ser­vices. Par­tic­u­lar­ly among the grow­ing mil­len­ni­al sec­tor of our lo­cal pop­u­la­tion.