STRINGENT measures governing the financial operations of the country’s credit union sector are here.

The Central Bank yesterday presented a 67-page document outlining its proposed policy for the Credit Union Act during a public consultation at the Hilton Trinidad, St Ann’s.

The policy proposal was created in response to a decision made by Cabinet in July 2005, when it was decided that the supervision of the financial activities of all credit unions should be integrated under the aegis of the Central Bank.

And after four years of consultations, the proposed document was drafted, Deputy Governor of the Central Bank Joan John said yesterday.

’The new legislation will, among other things, encourage greater prudence in the management of loans granted by credit unions, it will provide appropriate conditions for the payment of dividends, it will ensure the provision of active capital, it will provide guidelines for the investment activities of credit unions, it will ensure more effective cooperate governance, it will enhance the confidence of members and the public in the sector, it will also enhance potential management practices and improve risk management, it will also provide readily available and reliable data for effective monitoring and research,’ John said.

John said the revised legislation was necessary now more than ever because of the changing landscape of the financial operations of credit unions.

Up to last year, the country’s credit union sector controlled a total of some $8.5 billion worth of assets, John said.

’Many credit unions have now become significant investors in the financial market, bringing them face to face with all the risk and potential pitfalls inherent in this type of activity and indeed raising the bar on the level of expertise and experience required to successfully manage these risks,’ John said.

’The intent of this document, which is to amend the Credit Union Act, is to ensure that the credit union sector operates from a position of greater strength, safety and soundness,’ John said.

Wendy Ho Sing, deputy Inspector of Financial Institutions at the Central Bank, yesterday presented the policy proposal document to stakeholders of the credit union industry.

During her presentation, Ho Sing said that credit unions will be limited to exactly how much money they can borrow and lend.

A mandatory insurance protection fund, similar to deposit insurance, will also be implemented, Ho Sing said.

The Central Bank has also formed a suitably trained separate unit to monitor credit unions, Ho Sing said.

The policy proposal document is currently with Finance Minister Karen Nunez-Tesheira and is expected to be taken to Cabinet for approval this year, Ho Sing said.