Call for review of credit union loan limits
The Central Bank has been called on to review the lending restrictions it imposes on credit unions.
Around half of credit unions have some form of cap imposed by the regulator on what they can lend.
Now Fianna Fáil finance spokesman Michael McGrath is bringing a private members' bill on the issue before the Dáil. He claimed the sector was overburdened with regulations.
There are lending restrictions on 189 credit unions, which is close to half of all credit unions in the State.
This is at a time when the amount of lending being issued by credit unions is at an all-time low.
Mr McGrath has called for a concerted policy initiative to ensure the full potential of the credit unions are realised.
He said the credit union movement was facing very serious challenges, with 52pc operating under lending restrictions.
He said these restrictions can take the form of a cap on the overall monthly amount of lending a credit union can do, or more commonly a cap on the actual amount of an individual loan.
Mr McGrath said that according to the Irish League of Credit Unions, the sector had around €5bn to lend but it is not able to lend it due to restrictions.
Mr McGrath commented: "The credit union sector has a proud tradition in communities throughout the country.
"With expert local knowledge and strong personal relationships, credit unions are able to make sound judgments about lending to individual customers, small businesses, the self-employed and farmers."
The Fianna Fáil finance spokesman said the sector has survived the crisis well, with just 1pc of credit unions needing State funding support since the financial crisis began.
He said the not-for-profit and independent nature of credit unions is vital to the success of the sector.
Earlier this year, the registrar for the sector, Anne Marie McKiernan, invited credit unions that have lending limits imposed on them to apply to her office in the Central Bank by September to get the restrictions lifted.
She said that many credit unions had yet to adequately address weaknesses in policies and controls to meet regulatory standards.
A spokeswoman for the Irish League of Credit Unions said the imposition of restrictions has been very damaging to the overall loan book of the sector.