Restrictions on lending at credit unions have seen the value of loans plummet, according to the Central Bank.
Over half of the country's credit unions are currently subject to lending restrictions.
In the majority of cases this means credit unions are restricted to giving out loans for amounts between €10,000 and €30,000.
However, in a briefing prepared for the Dáil spending watchdog, the Registry of Credit Unions, which operates under the umbrella of the Central Bank, said the reality was credit unions were "not lending up to the lending restriction amount".
The imposition of widespread limits emerged in 2011 amid concern over lending practices across the credit union movement.
The regulator said the majority of loans being issued now were lower than what was allowed under the restrictions.
Deputy Registrar of Credit Unions Elaine Byrne told the Public Account Committee that 56pc of the country's 387 credit unions were currently subject to lending restrictions.
● Nine out of every 10 has a limit on individual loan size and/or commercial lending activity;
● Fewer than 10pc have a restriction on the aggregate amount they can lend each month.
The regulator also said 38pc of credit unions are currently subject to commercial lending restrictions.
"Commercial lending is a specialist form of lending that requires specific skills and expertise," the document said.
"In general, we view this type of lending as high risk and not appropriate for the majority of credit unions, particularly in light of the current issues that have been identified in relation to lending standards and practices."
The regulator said lending restrictions placed in individual credit unions were being reviewed on a regular basis.
It said the number of restrictions was "a reflection of concerns about lending practices in the sector".
While they were intended to be a short-term measure, the regulator said they could not be relaxed until weaknesses in governance systems and control were sorted out.
The Irish League of Credit Unions, which represents most credit unions, has described restrictions being imposed as "unduly broad" and said it feared consumers would be pushed into the hands of moneylenders.
There has also been concern that small businesses, the self- employed and farmers are being deprived lines of credit as a result of the clampdown.
Separately, the Central Bank said it would be supportive of credit unions offering additional services, provided these were not contrary to financial services legislation.