Threat to credit unions

Officials of major credit union groups are seeking urgent talks with Prime Minister Kamla Persad-Bissessar on Government’s proposals for control of the movement. In a letter to the prime minister, they warned of the disastrous and destructive impact of proposals in the draft Credit Union Bill, the Central Bank’s Draft Policy Proposal and the Consultation Paper on the Protection Fund for Deposits and Shares Held in Credit Union. 

The letter was signed by Jacinto Martinez, Joseph Remy, Rawle Richardson and Esme Raphael and is coped to Finance Minister Larry Howai, Labour Minister Errol McLeod, Central Bank Governor Jwala Rambarran and Karul Adams, Commissioner for Co-operative Development. The officials said Government’s insistence on putting the credit union movement under the aegis of the Central Bank “will subvert and destroy the unique identity and purpose of our credit unions”.

“Repeatedly, at our consultations with the Central Bank and the Ministry of Finance on the policy proposal and the Draft Credit Union Bill, and with the Commissioner of Co-operative Development on the amendments to the Co-operative Societies Act, we have made the point that credit unions are not commercial banks. “They constitute an indigenous financial instrument of the people’s sector and are a critical part of the shareholding democracy to which we all aspire,” they said.

The credit union representatives said they supported Government on the issue of a stronger, more rigorous and accountable financial landscape and “maintaining the highest standards of prudential regulation and supervision” for the sector. 

However, they added: “To date, nothing that has come from the Government has succeeded in assuaging our members’ concerns. We are of the firm view that the Government’s take-over of the Co-operative Credit Union Movement through Central Bank regulation would be the death knell for the movement whose growth and extraordinary success has been the result of the distinctive, people-oriented character and unique values based business model, with built-in safeguards that set it apart from the commercial banking sector.”

They said the Central Bank, as a major advocate of the commercial banking sector, has a conflict of interest in the matter and is unsuited to the role ascribed to it under the proposals for regulation. The groups have asked the prime minister for an urgent meeting at the earliest possible date to discuss recommendations for accountability, regulation and supervision of credit unions in a way that will protect the “people based and people centred” sector.