Development Best Practices in Credit Union Supervision: Chartering New Credit Unions

This paper discusses the different aspects of chartering a new credit union. It lists the goals of the organizational body in charge of credit union chartering as:

• To encourage the formation of credit unions and economically sound financial institutions;
• To promote savings and access to credit for credit union members.

The paper discusses:

• The types of charters: occupational, associational or community charters;
• The founders of the credit union and their necessary qualifications;
• The importance of member support;
• The necessity of minimum capital formation requirements.
• Required documentation for chartering, such as:
  • The name and location of the proposed credit union;
  • The services on offer, etc.

As per the paper, some of the factors that lead to the success of a credit union are:

• The necessity for proof of economic viability through a business plan;
• The need to clearly state the objectives of a business plan;
• The need for clarity of information in a business plan.

The paper also discusses:

• Requirements for the management information system: The necessity of an automated or manual accounting system;
• Chartering body procedures:
  • The assessment of a business plan;
  • The qualitative evaluation and assessment necessary for the approval of a charter;
  • The right of the chartering body to deny charters.

The paper concludes by stressing the need for on-site visits before granting a license.