Credit unions were popular much earlier and do not slow down now. True, not every borrower fully understands what kind of formation this is and how it differs from an ordinary bank. Both of them practice issuing loans, but their essence is fundamentally different.
Credit Union Purpose
First you need to understand the fact that credit unions, credit cooperatives or cooperative banks are not commercial organizations. Such a structure does not set itself the task of making a profit from a loan. The credit union provides financial support to people who need help and are members of this community. Anyone can join such a union, the main thing is that his views coincide with a single social principle. For example, members of one credit union may be employees of a certain company, residents of one district or people who are united by one hobby.
The principle of the credit union
Credit unions became popular in the 90s. Regardless of the state of the economy, such organizations were persistent. The number of deposits was growing steadily, so participants could always count on a profitable loan.
Currently, more than 2.5 thousand credit unions are registered in the Russian Federation. The reason for such a high popularity is the simplicity of obtaining a small loan, which does not require a large package of documents and at a percentage, the value of which is much more profitable than in a commercial bank.
The activities of the credit union is extremely simple and understandable to any layman, and therefore attracts people. Each participant is allowed to make deposits, allowing to count on receiving certain percentages. If such a need arose, the participant may ask for a loan. Most petitions end with a positive result, but at the same time, a certain interest rate is set. The amount of money provided to the borrower is formed from the funds contributed by depositors, so the latter receive a certain percentage. This is the secret of the existence of such formations.
Credit Cooperative Associations
Currently, many credit institutions have a desire to unite in a union of credit cooperatives.
Such an association is characterized by the provision of assistance and various services aimed at improving the efficiency of the cooperative and accelerating the pace of its development. Unions of
credit organizations are of 2 types:
- Regional Union - cooperatives whose location is concentrated in one region.
- Nationwide Union - an association of credit organizations located anywhere in Russia.
The Union of Credit Cooperatives is a tool of the credit market, the task of which is to ensure the most comfortable conditions and a high degree of productivity of credit education. The association opens up additional financial and other types of resources to the credit cooperative, which helps to solve many problems that an isolated credit union cannot cope alone. The range of services provided is very diverse and depends on the needs of a particular cooperative.
Credit Cooperative Association Services
The Credit Union Association practices the provision of:
- Technical services, which are understood as: training of employees of credit cooperatives, promotion of a cooperative in the market, solving issues related to the system of operations and managing a cooperative.
- Financial services - consultations aimed at informing the staff regarding the liquidity of the expenditure and income of the credit cooperative, as well as resolving issues related to managing the total number of deposits in the credit cooperative.
Unions of credit organizations have a wide range of rights and obligations. For example, in terms of union functions, one can distinguish:
- assistance in the consideration of any issue by a member of a cooperative by a state or international authority;
- improvement of regulatory documents;
- development of new services;
- control over the activities of a credit cooperative.
In addition, the credit cooperatives union is improving the regional and national system of financial mutual assistance. The Association undertakes research work, the main task of which is to discover a new way of doing business.
What is the difference between a credit union and a bank?
The main differences of a credit union from a bank:
- Unlike banks, credit unions do not seek to profit from the provision of financial resources on credit.
- Only a shareholder can resort to the services of a credit formation, and the client base of the bank has no restrictions.
- The activities of unions cannot be called public. The organization and the client interact with each other on the basis of membership, their relationship is not client.
- Only a citizen, an individual can become a member of a credit union. In addition, they should be united by one community, they should be familiar with each other. The decisive role is assigned to the last circumstance, which involves mutual responsibility.
- A credit union cannot risk the contributions of shareholders. The income received by the credit union should be distributed among the shareholders or aimed at reducing the cost of the service, that is, it should turn into a means of most effectively meeting the needs of the union members.
- Any change in the work of the credit union must be mutually accepted by all members of the union, depositors, borrowers and staff.
About the "New Credit Union"
Credit Union Bank is a joint-stock commercial banking institution whose net assets can be called relatively small. This institution has been officially registered in Moscow. The financial institution described is primarily located in the Russian capital.
The main areas of activity that this credit company is most actively developing include:
- granting a bank loan to corporate clients;
- banking services for legal entities;
- raising funds of Russian citizens through bank deposits.
If we talk about the retail business, we can say that the New Credit Union Bank is at a fairly low level of development.
Founders of the New Credit Union
JSCB “New Credit Union” is a small commercial bank engaged in lending and servicing corporate clients accounts. The bank practically does not engage in the development of retail business, the resource base includes for the most part its own funds.
The founders of credit education, established in 1994, are the following legal entities:
- AOZT "Intek";
- AOZT Laka;
- MP "Intelcom".
The New Credit Union received the right to attract deposits in 2009.
Credit Union Contribution Taxation
The credit union estimates are approved by the supervisory board, representing the interests of credit union members between the general meetings. Estimates are necessary in order to plan income and expenses. The main source of income is contributions, and expenses include the maintenance of the credit union and the implementation of statutory tasks based on their expected income.
Section 19 of the Law on Credit Unions stipulates that the property of a credit union includes: entrance fees, mandatory share contributions, other contributions of members of a credit union (except for deposits placed on deposit accounts), charitable contributions.
And in paragraph 4 of Art. 157 of the Tax Code of the Russian Federation states that there is no need to levy a tax on entrance, compulsory, additional and earmarked contributions of a credit union. At the same time, charitable contributions accepted from another natural or legal person are subject to taxation.
The entrance fee is not refunded upon exiting the credit cooperative, and the payment of the share and other contributions must be made in accordance with the charter of the credit union.
About the conditions of creation
A credit cooperative can only be created if there are at least fifty people who share a common attribute. Each new credit union must have its own capital, formed from the entrance fees of participants.
Each shareholder has the right to one vote, which cannot be violated or changed, it does not depend on the size of the down payment or on the time of entry into the credit union. Any person who is close to the signs of the union, as well as someone who is recommended by at least one of the participants, can enter into such a formation. Exit time has no limits.
The main advantages of a credit union
Such associations are most attractive in that all personal funds serving as components of the total capital are retained. If necessary, a member of the credit union can count on a profitable loan, necessary for solving social, medical, housing and other needs. Each citizen who has a contribution to the credit union receives the interest determined by the charter.
The activities of a credit cooperative can be compared with the work of a commercial bank, since they share common functions and powers. But there is a significant difference between them, namely the purpose of the activities of these organizations. The former provide financial services and do not pursue monetary gain, while the latter direct all their efforts to profit.
What fees should a member of a credit cooperative pay?
All consumer credit unions require new customers to deposit funds that are repaid:
- Membership fee is the amount of money contributed by each new shareholder and spent on covering the costs of a credit cooperative and ensuring its regular activities.
- Entry fee. This payment is provided only in some cooperatives. If this obligation is spelled out in the charter, then the amount paid by the shareholder goes to reissue the documents, to amend the existing papers, to legal services, etc.
- Mutual contribution - a sum of money that becomes the property of a credit cooperative and is necessary to maintain the activities of the formation. A share payment may be either obligatory or voluntary.