Central Bank Declares 20 Credit Unions Defunct, Plans to Strengthen Financial Sector

Twenty credit unions have been declared as defunct by the Central Bank of Belize.  It is a move that will bring some advantages to the existing credit unions.  At yesterday’s press briefing, Central Bank Governor, Kareem Michael said that strengthening credit unions is an integral part of the CBB’s financial inclusion strategy. As the Registrar of Credit Unions, a responsibility given to the Central Bank governor back in 2005, Michael says that new legislation and policies are being drafted.

Kareem Michael, Governor, Central Bank of Belize: “In our latest strategy to build credit union resilience, the Central Bank has undertaken a two-pronged approach. Firstly, we are actively strengthening the credit union’s legislation with the drafting of a new bill, regulations and bylaws. The first Credit Union Act, which governs the sector, was enacted in 1944 with subsequent amendments and a partial revision only in 2022, before coming under the Central Bank’s, again as a reminder, regulatory umbrella in 2005. Redrafting credit union legislation ensures that regulatory frameworks keep pace with industry developments. Our second approach is to liquidate long inactive defunct credit unions. The Credit Union has identified 19 non-operational credit unions and have published a notice of liquidation order. Liquidating these entities helps to eliminate potential financial liabilities and risks to the overall financial stability and ensures the protection of members’ interests. Ultimately, it keeps the Credit Union movement alive. By building credit union resilience and fostering a balanced regulatory environment, we’re enabling credit unions to offer more competitive products and to grow sustainably. The 19 credit unions which I refer to, some of these, most of them would have been defunct from well before the central bank took responsibility through the office of the governor as registrar. And some of these are credit unions with 15, 50 members. These are not extremely large credit unions but there are one or two who had quite sizable assets. And maybe five, six years ago we had made an effort to properly liquidate those credit unions but that project was halted for different reasons. So now we’re doing all that were registered on the books.”

Governor Michael noted that the improved regulatory framework will help to ensure mass liquidations of credit unions do not happen in the future.