Senior officer with the Department of Cooperative Development Ruth Forbes noted Thursday that credit unions provide significant advantages for the country allowing residents to increase savings and become part owners in financial institutions while keeping all of the organisation’s profits in the domestic economy.
“The role of the credit union is really to promote saving and thrift among members and to encourage members to borrow from the pool of funds that they have themselves accumulated for productive purposes,” Ms. Forbes said.
Highlighting the usefulness of credit unions as vehicles for saving and building wealth, Ms. Forbes pointed out that many of the institutions provide numerous financial products to their members.
She noted that as owners of the organisations, credit union members often obtain favourable rates on loans that can be used for a variety of purposes.
“The loans are really to be used for productive purposes which may include educational loans and mortgages, as some credit unions are now entering the mortgage market,” Ms. Forbes said.
Industry officials explained that a major concern of prospective credit union members – the security of their deposits – is guaranteed by a detailed regulatory framework.
“The Department of Cooperative Development is responsible for the regulation of cooperatives in conjunction with the Cooperative Societies Act and Regulations and one of our main functions is to provide supervision for these cooperative entities to ensure that the members’ investments are always protected,” she said.
She added, “On the issue of deposit insurance the credit unions have always had a built in mechanism whereby there is some insurance for member deposits up to a prescribed amount.”
General Manager of the Bahamas Cooperative League Frank Davis said credit unions offer a number of other benefits associated with ownership of a company.
“Members of credit unions and cooperatives are entitled to attend the organisation’s annual general meetings and have a vote irrespective of how much they have in the institution,” he said.
“The organisations are democratically controlled, have open membership and provide one vote per member regardless of how much they have on deposit,” he added.
The existing legislation governing the cooperatives sector was enacted in 1974, Mr. Davis pointed out, adding that the Cooperatives Bill presently before parliamentarians will do much to improve the operation of the sector.
“The Bill is expected to bring a number of enhancements to our current situation in keeping with the modern day financial institutions to make sure that we’re operating with the standards for 21st century institutions,” he said.
Over 118 million credit union members worldwide joined in International Credit Union Day
By Darrin Culmer, The Bahama Journal
