jwala rambarran : implications of the proposed regulatory regime for credit unions feature address by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the 42nd annual general meeting of aero services credit union, port of spain, 29 march 2014. * * * ladies and gentlemen, it is my honour to be asked by the board of directors of aero services credit union co - operative society limited to address its 42nd annual general meeting. i believe this invitation comes at an opportune time for the central bank to once again reach out directly to the credit union movement, as we move even closer towards regulation of the credit union sector. it is also my pleasure to speak directly to you, the membership of aero services credit union. i have known some of your board directors for close to a decade and i am aware that aero services credit union has been responding to the challenges of a harsher socioeconomic climate. i note that, in light of an aging demographic, you have had to expand your membership bond outside the aviation industry. equally impressive is that you have managed to grow your resource base to over tt $ 200 million while managing delinquency in a historically low interest rate environment and more competitive financial services sector. apart from building wealth for your members, aero services credit union continues to demonstrate the fundamental values sacred to the credit union movement, a clear indication that you are living up to your motto “ the credit union where every dream counts ”. you are an example of how credit unions when managed properly can meet their members ’ expectations, maintain their trust and confidence, and fulfill your commitment to those who trust you with their hard earned money. for this reason, i want to underscore that the central bank recognizes the important contribution that credit unions are making to our society, especially in fostering greater financial inclusion by reaching out to the ordinary working men and women who are underserved by traditional financial institutions. today, about one - third of the population can boast of membership in credit unions. credit unions have collectively amassed an asset base of over tt $ 9. 5 billion or 3 percent of the assets of the total financial system assets in trinidad and tobago. your relevance, however, is much richer than your asset base. credit unions have helped their members to develop a healthy savings habit, educated them on financial matters and financed small business start - ups, all while experiencing considerable turbulence and consolidation. you have propelled the ideals of financial inclusion as well. these ideals are

and small and micro enterprise development, the co - operative credit union league, the association of co - operative credit union presidents, and members from the credit union movement. during the seven - year consultation period, the central bank made several concessions from its original negotiating position in an attempt to reach out to the credit union movement and to narrow, as much as possible, the existing gap between intention and policy. in fact, when i closed consultations last july, i made several concessions on our negotiating positions in the spirit of compromise and consensus building. by my count, the central bank made more than ten substantial concessions spanning governance, prudential requirements, non - financial services and penalties affecting credit unions. ladies and gentlemen, i must indicate that the draft credit union bill recognizes the cooperative principles, democratic structure, service to members and social goals of credit unions. in developing the legislation, the central bank considered it important that many of the current services and practices of credit unions be maintained. however, we also considered it absolutely necessary that relevant and appropriate prudential limits be put in place and enhancements made for more effective governance. in these two areas of governance and prudential limits, we did not accept several suggestions made by the sector, as they were not consistent with the desired safety and soundness objectives of the credit union legislation. governance requirements the draft credit union bill recognizes that members are the ultimate decision - making body for the credit union. the bill contains provisions for proper governance and effective risk management in order to ensure the safety and soundness of credit unions. credit unions that are sound can best meet the needs of their members, including providing financial services, training members in entrepreneurship and in financial literacy. governance proposals seek to ensure that the directors of a credit union are fit and proper and that the board is effective, accountable and transparent in the management of their credit union. as far as fit and proper goes, the proposed legislation seeks to establish minimum qualifications for board directors. the bill requires that board directors who do not meet the minimum qualification requirements would have to obtain relevant training within a reasonable period of 18 months of becoming a director. today ’ s dynamic financial environment requires persons who are knowledgeable, who understand the complex products being offered as investments, and who can guide the credit union based on an understanding of the environment and the changes taking place. prudential criteria requirements in addition to strong governance, there must be standards, limits and prohibitions which guide the financial management and operations of the credit union