Credit unions: credit conditions, documents

Credit unions were popular much earlier and do not slow down now. True, not every borrower fully understands what kind of formation it is and how it differs from an ordinary bank. Both of them practice issuing loans, but their essence is fundamentally different.

The purpose of the credit union

To begin with, it is necessary to assimilate 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 the issuance of a loan. The credit union provides financial support to people who need help and are members of this community. Anyone can join such an association, the main thing is that his views coincide with a single social principle. For example, members of the same 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 stable. The number of deposits was steadily growing, so the participants could always rely on a favorable loan.
At the moment, more than 2.5 thousand credit unions are registered in the territory of the Russian Federation. The reason for such high popularity is the ease of obtaining a small loan that does not require the provision of a large package of documents and at a percentage that is much more profitable than a commercial bank.

The activity of the credit union is extremely simple and understandable to any man in the street, that's why he attracts people. Each participant is allowed to make deposits that allow him to expect to receive certain interest. If there is such a need, then the participant can ask to give him money on loan. Most of the applications end with a positive result, but a certain interest rate is established. The amount of money provided to the borrower is formed from the funds contributed by the depositors, so the latter receive a certain percentage. This is the secret of the existence of this kind of formations.

Association of Credit Cooperatives

At present, many credit unions have a desire to unite in a union of credit cooperatives. Such an association is characterized by assistance and various services aimed at improving the efficiency of the cooperative and accelerating its development. Unions of credit organizations are of two types:

1. Regional Union - cooperatives, the location of which is concentrated in one region.
2. A nationwide union is a union of credit institutions located anywhere in Russia.

The Union of Credit Cooperatives is an instrument of the credit market, whose task is to provide the most comfortable conditions and a high degree of productivity of credit education. Joining the association opens additional financial and other types of resources to the credit cooperative, which contributes to solving many problems that an isolated credit union can not handle alone. The range of services provided is very diverse and depends on the needs of a cooperative.

Services provided by the Association of Credit Cooperatives

The Association of Credit Unions practices the provision of:

• Technical services, which are understood as: training of credit cooperative workers, promotion of the cooperative in the market, solution of issues related to the system of operations and management of the cooperative.
• Financial services - consultations aimed at informing the personnel regarding the liquidity of the expenditure and income part of the credit cooperative, as well as addressing issues related to managing the total number of deposits in the credit cooperative.

Unions of credit institutions have a wide range of rights and obligations. For example, in terms of the functions of the union, you can distinguish:

• Assistance in the consideration of a question of a cooperative member by a state or international authority;
• Improvement of normative documents;
• Development of new services;
• Control over the activities of the credit cooperative.

In addition, the Union of Credit Cooperatives is improving the regional and national system of financial mutual assistance. The Association undertakes to carry out scientific research, the main task of which is to find a new way of doing business.

What is the difference between a credit union and a bank?

The main differences between the credit union and the bank are:

1. Unlike banks, credit unions do not seek to profit from the provision of financial assets on credit.
2. Only the shareholder can apply to the services of the credit organization, and the client base of the bank has no restrictions.
3. The activities of the unions can not be called public. Organization and client interact with each other on the basis of membership, their relationship is not client.
4. A member of a credit union can become only a citizen, an individual. In addition, they must be united by one community, they should be familiar with each other. The decisive role is given to the latter circumstance, which assumes mutual responsibility.
5. The credit union can not risk the contributions of the 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 must become the means to most effectively meet the needs of the members of the union.
6. Any change in the work of the credit union should be mutually accepted by all members of the Union, investors, borrowers and employees.

On the "New Credit Union"

Credit Union Bank is a joint-stock commercial banking institution whose net assets can be described as relatively small. This institution was officially registered in Moscow. The financial institution is mainly located in the Russian capital.

The main areas of activity that are most actively developed by this credit company include:

• Provision of bank loans to corporate clients;
• Carrying out of bank service of accounts of legal bodies;
• Attraction of funds of Russian citizens through bank deposits.

If we talk about the retail business, we can say that the bank "New Credit Union" is at a rather 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 customers' accounts. The bank practically does not develop the retail business, the resource base includes, for the most part, its own funds.

Founders of credit education, established in 1994, are the following legal entities:

• Joint-Stock Company "Inntek";
• AOZT "Laka";
• MP "Intellect".

The right to attract deposits "New Credit Union" received in 2009.

Taxation of the credit union's contributions

The budget of the credit union is approved by the supervisory board, which represents the interests of the members of the credit union in the periods between general meetings. The estimate is necessary so that you can plan the income and expenditure part. The main income item is contributions, and expenses include the content of the credit union and the fulfillment of statutory tasks, based on their expected income.

Article 19 of the Credit Unions Act states that the credit union's property includes: entrance fees, mandatory share contributions, other contributions of members of the credit union (other than deposits placed in deposit accounts), charitable contributions.

And in paragraph 4 of Art. 157 of the Tax Code states that the introductory, mandatory, additional and targeted contributions of the credit union do not need to levy a tax. At the same time, charitable contributions received from another individual or legal entity are subject to taxation.

There is no refund of the entry fee upon withdrawal from the credit cooperative, and payment of share and other contributions must be made in accordance with the charter of the credit union.

About conditions of creation

A credit cooperative can be created only if there are at least fifty people who share a common feature. 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 can not be violated or changed, it does not depend on the amount of the initial contribution, or on the time of joining the credit union. Anyone who is close to the signs of the union, as well as one whom one of the participants recommended at the same time, can join such a formation. The release time has no limitations.

Main advantages of the credit union

Such associations are most attractive because all personal funds serving as integral parts of the total capital are preserved. In case of necessity, a member of the credit union can count on an advantageous loan, which is necessary for solving social, medical, housing and other needs. Every citizen who has a deposit in a credit union receives interest as determined by the charter.

The activities of a credit cooperative can be compared with the work of a commercial bank, since they share similar 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 benefits, while the latter direct all their efforts to making a profit.

What fees should a member of a credit cooperative pay?

All credit consumer unions require new customers to deposit money that goes to repayment:

• Membership fee is the amount of money contributed by each new shareholder and spent to cover the costs of a credit cooperative and ensure its regular activities.
• Entrance fee. This payment is provided only in some cooperatives. If this duty is prescribed in the charter, the amount paid by the shareholder goes to the re-registration of documents, to make changes to existing securities, to legal services, and so on.
• Unit contribution - the amount of money transferred to the ownership of a credit cooperative and necessary to support the activities of the formation. The contribution can be either mandatory or voluntary.