What is a credit union?

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A credit union is a co-operative financial institution, which is owned and controlled by its members. Credit unions are not-for-profit, and exist to provide a safe, convenient place for members to save money and obtain loans and other financial services at competitive rates. Members of a credit union share a common bond, such as their occupation, where they live or attend church. (Credit Union League 2004). The Jamaica Credit Union League, a co-operative central body embracing all the credit unions in the island was founded in 1942. The League was a voluntary association, which was democratically controlled and financed by its member credit unions. With the establishing of this League headed by Father John Peter Sullivan, the Movement now had an organization whose objectives included: representing its members by contacting the Government about issues such as legislation, conducting central business services, receiving deposits from Credit Unions and other Co-operative Societies, making loans to its member credit unions and also to undertake investments for the member credit unions by organizing new credit unions. Member societies paid fees of ten cents (10c) per annum per individual member to access the League’s services. In March, 1949 the League established the “deposit and loan section’ which required that credit unions to deposit sums equal to their statutory reserves. These credit unions could obtain loans at the rate of 5% per annum to meet their own lending demands. [i] Later individual members of credit unions were granted loans on the recommendations of their Credit Unions at the rate of 6%per annum. (Credit Union League 2004). The aim of the Credit Union is to provide a wide range of services to meet the needs of its members and to provide a safe place for savings and completive interest rates on loans.

WHAT IS A DEVELOPMENT BANK?

The Development bank of Jamaica was established on April 1, 2000 (Development bank of Jamaica, 2007) there was a merger between two owned Government of Jamaica institutions, which were the Agricultural Credit Bank and the National Development Bank Of Jamaica Limited. The Agricultural Credit Bank and the National Development Bank were founded in 1981.The Development Bank of Jamaica was governed by the Ministry of Finance and Planning and the board members, which was appointed by the Ministry. According to Development bank of Jamaica (2007) it is stated that the bank provides the following: it facilitates development financing to the productive sectors primarily in the areas of agriculture, agro-processing manufacturing, information processing tourism, service and mining and quarrying. It helps with credit principally through a wide range of Approved Financial Institution (AFIs), including Commercial and Merchant Banks, People’s Cooperative Bank; Credit Unions are private sectors development financial institution. They invested in the agricultural, manufacturing, tourism, agro-processing, quarrying and mining and services sectors. They also play a critical role in non-credit activities principally with respect to the upgrading of the People’s Cooperative Banks as well as providing assistance to a number of sub-sectors which have faced difficulties.

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