The credit union movement, comprising 45 individual credit unions with a membership of over 900,000 savers, is now close to full compliance with international financial reporting standards.
This development comes ahead of the Bank of Jamaica (BOJ) assuming oversight authority for the cooperatives.
Mr. Errol Gallimore Registrar of Co-Operative & Friendly Socieites (Acting)
Speaking with JIS News Wednesday (August 25), Registrar of Cooperative Societies, Errol Gallimore, said that compliance with the international financial reporting requirements is significant, as it ensures the protection and security of the savings of credit union members as well as the integrity of the institutions.
“Strict adherence to these financial standards will be a critical requirement of the central bank, once it assumes full supervisory role. The legislation to effect this change has entered the Bill drafting stage. Already, credit unions are 99 per cent compliant with new capital structure requirements,” Mr. Gallimore said.
The new requirements allow for a portion of members’ shares to become fixed or permanent and, as such, treated as equity, as well as a voluntary pool of shares which would be treated as deposits. As at December 2009, the assets of the credit union movement totalled $56.5 billion. Loans amounted to over $36 billion, while savings was some $44 billion.
According to the Registrar, sectoral discussions in relation to BOJ oversight of the credit unions, which started in earnest over eight years ago, were at an end. The Bill to bring regulatory framework into law is now being drafted.
The new regulations to bring the cooperative movement under the ambit of the Central Bank will be similar to those affecting licensed/deposit-taking financial institutions, supervised by the Bank.
These institutions must improve their capital base, in order to engage in greater levels of investments and loans, as directed by the BOJ.
The bank’s rules for regulated institutions include credit-exposure limits, covering the acquisition dealing in or granting of credit facilities; investment limits; limits on fixed assets; minimum cash reserves and liquid assets; loan classification and provisioning guidelines; prudential returns and publication of accounts with regular submission of financial information and periodic examination of institutions.
The supervisor of banks and licensed financial institutions is the Governor of the BOJ. Where the Minister of Finance, after consultation with the supervisor, believes that a licensee is or appears unlikely to meet its obligations, he may take appropriate action. Breaches include the value of the licensee’s assets being substantially less than the amount of its liabilities, or where the licensee ceases taking deposits.