Moneylenders exploit credit union curbs as lending dries up
LENDING restrictions being imposed on credit unions by the Central Bank are driving people into the hands of moneylenders and threatening the viability of farmers and self-employed people, the main lobby group for the sector has claimed.
A large number of credit unions have been ordered to restrict lending and this is putting huge pressure on ordinary credit union members and stopping credit unions making loans to community groups, the Irish League of Credit Unions claims in a letter sent to the registrar of credit unions, James O'Brien at the Central Bank.
The letter, a copy of which was seen by the Irish Independent, described the restrictions on lending as "inflexible".
In the letter, chief executive of the league Kieron Brennan said the ban on business lending, in addition to restrictions on lending to households, was impacting on small farmers who were traditional borrowers from credit unions.
"Credit unions are now being forced to turn away many members with excellent records requiring modest levels of credit," the letter states.
The ban on business lending meant that self-employed people, farmers and small tradesmen, who were excluded from mainstream lines of credit, risked being put out of business because they could no longer get credit union loans.
A spokeswoman for the Central Bank would not comment on the number of credit unions that had had lending restrictions imposed on them.
It is understood that lending restrictions do not impact on credit unions' abilities to make small personal loans.