Meaning of Credit Union and Thrift Societies
Credit union and Thrift societies can be defined as the coming together of a group of people with common interest who have agreed to pool their resources together from which loan facilities are made available to members at an agreed rate of interest.
The credit union’s mission is to provide its members with access to reasonably priced financial services and encourage the development of good financial practice.
It is common among people in the same line of trade or business.
Aims and Objectives of Credit Unions and Thrift Societies
- To assist members who are in need
- To ensure payment of dividend to members
- To encourage savings habit among members
- To provide loans to members at a very low interest rate
- To ensure payment of dividend to members
Sources of funds to credit union and thrift societies
- Deposits of members
- Loans can be obtained from commercial banks
- Interest from loans given to members
- Shares purchased by the members
- Registration fee paid by incoming members
- Fines imposed on defaulting members
Services provided to members
The following are the services provided by the credit union and thrift societies to their members
- Provision of loan facilities: The societies grant loans to members who needs money at a reduced interest rate.
- Payment of dividend: They pay dividend to members from the surplus fund
- Foster close relationship between members: Credit union ensures close relationship among members.
- Encouragement on savings habit: The society encourages members to save
- They render help in time of need: Members who need help are supported by the societies
Test and Exercise
- Define credit unions and thrift societies
- Highlight the sources of funds to credit union and thrift societies
- State the services rendered by the credit union and thrift societies to their members
- Aims and objectives of credit union and thrift societies
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