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.