A "credit union" is a cooperative financial association[1 (http://www.bankisrael.gov.il/en/NewsAndPublications/PressReleases/Pages/16-06-2014-BankingSupervision.aspx?ControlMode=Edit&DisplayMode=Design#_ftn1)] owned and controlled by its members, which does not operate for profit. A credit union is intended to provide its members with bank account management services, savings, obtaining loans, and obtaining other basic banking services. These narrowed services may provide a framework for the management of current account activities, and may constitute a worthwhile alternative to managing an account at a commercial bank for a significant portion of the population.
The draft details the activities and measures required on the part of anyone wishing to establish a credit union, and the manner in which the
The draft sets forth that the shareholders who are members of a credit union, as it is a cooperative financial institution, are the account holders themselves, and they are the ones who choose the Board of Directors of the credit union. Rules will be set for each credit union, that will define the rights and conditions of membership in them, subject to the requirements of the law, and based on a common bond among the members, and only a member of the union will be permitted to manage an account in it.
Credit unions will operate based on a social orientation, and will set themselves the objective of improving the well-being of their members. Profits will be invested in improving services to the members, in order to ensure their well-being, and in the growth of the credit unions themselves. The establishment of credit unions may contribute to increased competition in the banking system, since their reduced cost structure and social character will lead to services to their members being provided under relatively good conditions. These unions may attract an attractive community of customers, thereby leading indirectly to an improvement in terms within the banking system for that response group.
With the aim of ensuring the stability of credit unions, and in order to prevent the possible damage of the collapse of "new players" that will increase competition for a short period but not survive over time, prudential requirements have been set that will be applied to credit unions as listed in the draft, including:
* Initial capital totaling no less than
* Formulation of a business plan that details how the union plans to serve the needs of its intended members, in accordance with their characteristics. The business plan, including the minimum number of union members, will be submitted for approval of the
* Requirements regarding the computer and operational systems.
[1 (http://www.bankisrael.gov.il/en/NewsAndPublications/PressReleases/Pages/16-06-2014-BankingSupervision.aspx?ControlMode=Edit&DisplayMode=Design#_ftnref1)] A credit union will apparently be incorporated as a "
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