Lenihan throws a lifeline to credit union borrowers
CREDIT Union members in financial difficulties have been given a reprieve by Finance Minister Brian Lenihan.
In a positive move for the organisation, which has 2.6 million members, the Government has announced the extension of longer-term lending limits for credit unions.
Currently, credit unions are restricted from having more than 20pc of their loan portfolio outstanding for more than five years and only 10pc of their portfolios may be for more than a decade.
Under the new measures, these limits will be increased to 20pc and 15pc respectively.
It will also empower the Registrar of Credit Unions to impose requirements on credit unions in relation to lending practices and also requires credit unions to have appropriate systems in place to monitor compliance with the act.
"Many credit union members are experiencing difficulty in meeting loan repayments due to unfavourable changes in their financial circumstances in the current economic environment," said Mr Lenihan.
"Increasing the lending limit for credit unions and formalising arrangements in the area of rescheduling of loans will facilitate credit unions in their wish to ease the position of these members."
The Irish League of Credit Unions (ILCU) said that the changed regulations will allow for these circumstances, but will also ensure that the financial position of the credit union is safeguarded and is accompanied by "honest, prudent and transparent accounting practices".
Mark Bailey, President of the ILCU, welcomed the measure.
"We had a meeting with the Minister for Finance about this issue and he was very anxious to help credit unions help their members," he said.
"He asked that this issue was resolved between the ILCU and the Registrar of Credit Unions to offer all credit unions and their members more flexibility and clarity on the issue of loan repayment.
The extension, under Section 35 of the Credit Union Act 1997, requires an amendment to the Bill and is provided for in the Central Bank Reform Bill 1010.
A consultation will take place on the Bill over the coming weeks.
The Bill is the first of three pieces of legislation that will effectively reconstruct the Irish system of financial regulation following criticism of its handling of the banking crisis.