A credit union is a member-owned, not-for-profit financial cooperative formed solely to meet the needs of its membership. Credit union members can be people who share something in common such as where they live, work or worship. Credit unions pool their members’ deposits in order to provide loans to other members at affordable rates. Members also benefit from returns on their savings.
1849 is generally accepted as the year that the first credit union was organized. Friedrich Wilhelm Raiffeisen, mayor of a small German town whose inhabitants had suffered heavy financial losses due to a crop failure and a depression, conceived the idea. He believed that by pooling small sums of money, a fund could be established from which loans could be made at a low rate of interest. Now, as then, credit unions make small loans that other financial institutions would consider too small for processing.
In so far as matters pertaining to credit unions are concerned the functions of the Registrar have been transferred to the FSC, as the passage of the Financial Services Commission Act, 2010-21, vested the responsibility to regulate credit union in the FSC.
Credit unions are governed by a volunteer board of directors, supervisory committee and credit committee, who are elected by the membership. Each member has equal ownership in the credit union and one vote in the election of the board of directors regardless of how much money that person has deposited in the credit union.
Every credit union serves a specific field of membership. Anyone who falls within the common bond of the credit union may join and share in its ownership. A common bond can be defined as the employees of a company, members of a civic or church group, residents of a community or numerous groups together.
Because a credit union is a not-for-profit organization based on volunteerism, there is no compensation for the board or committee members. However, elected officers may be reimbursed for expenses incurred in the performance of their duties. Remuneration to elected officers in any form must be provided for in the by-laws of the particular credit union or alternatively, approved by members at a general meeting.