No Govt plan to seize credit union funds

Addressing the opening of a two-day National Consultation on Co-operatives at the Chaguaramas Convention Centre yesterday, Montano declared that concerns about the consultation "being a ruse to gain control over credit union funds could not be further from the truth."

Referring to an October 2004 interim report on the status of Trinidad and Tobago’s co-operative sector, the minister said Government still believes that the sector can serve as an important vehicle for socio-economic development in TT, but "not in its present form."

Montano observed that there are 287 active co-operative societies and 819 inactive ones in TT today. Of the 287 active societies, 46 percent are credit unions, 29 percent are junior co- operatives while another seven percent are fishing or agricultural cooperatives. He explained that part of the reason why the co-operative sector is in such disarray at this time was because the private sector has increasingly encroached on the co-operatives’ traditional marketplace, and the impact of globalisation had never been considered.

Montano advised the sector’s stakeholders to learn new and effective management techniques in order to compete effectively in today’s market place and using 15-year-old business strategies was "a formula for failure." Montano suggested that co-operatives consider forming alliances with private sector and civil society entities in order to improve their operations. He observed that this model has worked successfully in nations such as Norway, Denmark and Sweden.

The Minister also expressed concern that co-operatives were not doing enough to attract young people to do business with them and must seriously address this deficiency. On governance issues for the sector, Montano said co-operatives’ boards of directors must take a more active role in their organisation’s activities while "maintaining a level of independence from management." Noting the unique role played by credit unions in this regard, Montano said their financial operations will be placed under the auspices of the Central Bank.

Speaking afterwards with reporters, Montano said the financial operations of all credit unions should be under the supervision of the Central Bank by year’s end, but governance issues (such as registration and de-registration) would remain under the purview of the Labour Ministry. He added that the Legislative Review Committee is currently making amendments to the Financial Institutions Act and working on another piece of legislation to facilitate this move.

Noting that the same issues that affect other financial institutions affect credit unions as well, Montano said it made better sense for the financial operations of credit unions to be placed under the aegis of the Central Bank rather than the Labour Ministry, since the Central Bank already possessed the wherewithal to address those issues.