NEW RULES being imposed by the Bank of Jamaica will improve the regulation of the credit union sector, says Carl Domville, president of the Jamaica Co-operative Credit Union League (JCCUL).
There has been some uncertainty in the credit union movement since the JCCUL announced that Government guidelines were expected to be tabled in Parliament. A press conference at the Terra Nova Hotel in Kingston on Friday was meant to ease the concerns.
"The Jamaican credit union movement embraces the regulation and supervision of credit unions by the Bank of Jamaica," Mr. Domville said.
JCCUL has been holding discussions since 2000 about the proposed regulations with the Ministry of Finance and the Bank of Jamaica. Over the sectors 63 years of operation in the island, credit unions have been essentially self-regulating.
As at the end of June, this year, Jamaica had 53 credit unions with 700,000 members and a total of $17 billion in savings. With seven per cent of the total savings held in island, credit unions have just about doubled the percentage base they held a decade ago.
"Some credit unions may have to change some aspects of their operating policies once we are regulated by the BoJ, but the basic co-operative principles that credit unions operate under will not change," Mr. Domville said.
Christopher Samuda, JCCUL vice-president, said that "apart from the question of unsecured credit, I don't think anything is going to seriously impugn the communal spirit that we have." Unsecured credit consists of loans provided to lenders without the need for collateral.
Statistics from the League show that unsecured loans amounted to about 8-10 per cent of the total loan portfolio, and that five per cent of the total loan portfolio was delinquent.
"There may be a few credit unions that have had more lenient practices where that is concerned," Mr. Domville said. "They will be required to reduce the level of unsecured credit and my understanding is that time will be given."
The new regulations do not allow unsecured loans.
The major area of concern among members is whether the proposed regulations will affect how credit unions operate, said Yvonne Ridguard, another JCCUL vice-president.
"There are those who may feel a little bit disaffected with the tighter regulations," Mr. Samuda said. "The global direction is to bring credit unions under a central authority and under regulations. That is a direction which is inescapable."
