Credit unions are a co-operative financial institution which are owned and controlled by its members. These cooperatives are different from the banks and other financial institutions in the sense that the owners of these unions are also the members of it and there is no other external party involved. The profits from the operations of this union are distributed as dividends amongst the members themselves. The basic services that these unions provide are savings accounts and loans to its members.
The first credit union was formed in 1844 by a group of weavers in Rockdale, England. The shares were sold to its members in order to raise the necessary funds to purchase goods at prices lower than the market value and these goods were then made available to the members at a subsidized price. This was how the first credit union came into existence.
Over the years the idea of credit union spread to Germany in 1850, to Canada in 1901 and the United States in 1908. The progress of these unions was slow during the WW II, but people’s interest in it was renewed by the end of the war and by the end of 1945 there were 8,683 active credit unions all over the country and the number kept growing year after year. The number of such unions reached its peak in the year 1969 when there were 23,876 such unions in the United States alone.
During the 1970’s many small credit unions merged into larger ones that offered wider range of services thus bringing down its number but the membership numbers continued to increase and today approximately 85 million Americans are members of such union.
The National Credit Union Administration (NCUA) is the agency which supervises the working of these unions. They insure that these unions function according to the norms set for the credit unions. Before 1954, the NCUA was the governing body for the credit unions of America only, but as the concept of these unions spread international services department was established to cater to locations beyond North America too. And later Canada and Latin America were also covered by its revised charter.
The rapid rate at which the credit unions kept growing required a more vast and massive organization to control its worldwide growth and hence in 1970 the World Council of Credit Unions was formed and the NCUA returned to its original organization. Canada, Africa, Asia, Australia, Latin America, and the Caribbean were some of the members of the World Council.
While there are national and regional confederations that look into the working and development of credit unions in their concerned areas, the World Council has a broader outlook and supervises the overall progress and works towards uniting the worldwide unions.
The credit union which started in a small township of England is now a global phenomenon and is an important part of the financial system of any country. But the principle on which they were originally formed was “not for profit, not for charity, but for service,” and to date they function on this philosophy.