Introduction
The Trinidad and Tobago Credit Union Deposit Insurance Fund Co-operative Society Limited (TTCUDIF or the Deposit Insurance Fund) was registered in response to a need as revealed by research. The Deposit Insurance Fund is an Independent and Autonomous Institution regulated under the Co-operative Societies Act 1971 (Chap. 81:03) and the Co-operative Societies Regulations. Our members are Credit Unions who are also regulated under this Act.
The TTCUDIF was registered as a co-operative society in July 1999 with a membership of forty-two (42) credit unions.
Origin and Incorporation
In recent times, changes in government policy have brought increasing attention to the operations of credit unions. In addition, the liberalization of the financial markets has created a situation where there is keen competition in financial areas, with organizations moving away from their traditional roles, and carving new places for themselves. In reviewing the developing trends, on its own initiative and after a detailed study, the credit union sector noted that there was an inadequate chain of support for its organizations and members as a whole.
The Trinidad and Tobago Credit Union Deposit Insurance Fund Co-operative Society Limited (TTCUDIF or the Fund) was registered in response to the need as revealed by the research. The Fund is an Independent and Autonomous Institution regulated under the Co-operative Societies Act 1971 (Chap. 81:03) and the Co-operative Societies Regulations. Our members are Credit Unions who are also regulated under this Act.
The TTCUDIF was registered as a co-operative society in July 1999 with a membership of forty-two (42) credit unions.
The TTCUDIF is one of several interrelated “lines of defense” in a fairly complex system that is designed to provide limited guarantee of all members’ funds on deposits with credit unions who are members of the TTCUDIF.
The first line of defense is the credit union itself. The two main reasons why credit unions, or other financial institutions, fail are due to a lack of liquidity and an inability to operate on a positive basis. In the first case, the credit union cannot meet its members’ demands for cash. In the second case, it does not have an adequate capital base (share equity plus retained earnings) to carry it through tough times when its financial margin is narrowed or to withstand significant loan or investment losses.
The second line of defense is a Deposit Insurance Fund, which is, in effect, a central reserve fund to which members’ contribute annually.
The TTCUDIF has a three-fold purpose, i.e.:
- Protection – To protect members’ shares & deposits
- Stability – To maintain a fund that guarantees members’ shares and deposits and supports services that protect the Fund
- Development - To provide ongoing training and development for member units in all areas of credit union governance and leadership aspects.
The Fund is built up through annual contributions from member credit unions in relation to their individual growth. Annual contributions are calculated at ½% of incremental growth in shares and deposits.
In addition to assessments, the Deposit Insurance Fund is built up through earnings on investments.
In order for the TTCUDIF to protect the integrity of the credit union system, all credit unions should be an integral part of the system.
What we do
The TTCUDIF provides insurance against the loss of Shares and Deposits held by Members in their Credit Unions provided that their Credit Unions are members of TTCUDIF. A provision of coverage on unencumbered (net) shares and deposits of $125,000 (shares) and $50,000 (deposits) is offered to all our members. In essence, we promote and otherwise contribute to the overall stability of the Credit Union fraternity in T&T.
Managing risk is a vital and ongoing function that supports our work. We conduct on-going risk assessments of our members and monitor their performance and results through detailed diagnostic analyses of their audited financial reports. On-site examinations are conducted where an analysis of the operations of the Credit Union is examined thoroughly. Under certain circumstances, we arrange to have technical support and assistance of troubled member institutions and work closely with these units to guide them.
TTCUDIF'S Board of Directors consists of seven members, four of whom are elected from our member units and three who are selected on areas of expertise including legal, financial, human resources, economic, etc.
Led by a consultant Manager, who is responsible for supporting the Board in fulfilling its governance responsibilities , Board directions are translated into action and the organizations's operations are accomplished through the direction and control of said manager and exercise of the roles and functions of the staff.
TTCUDIF keeps abreast of best practices and applies those considered most appropriate for the Credit Union. TTCUDIF's work focuses on key aspects of governance and leadership, including monitoring the risk in our membership, and expanding our training impetus to provide the exposure for the transfer of knowledge and expertise to the officers and aspiring leaders of our Member units. As a result, TTCUDIF has successfully contributed to the sustaining and improving governance and operational capacity though strengthening expertise and skills of members.
TTCUDIF aims to ensure the stability and effectiveness of member Credit Unions through hosting programmes, seminars and conferences (both Local and Overseas) in order to provide sound overall governance and strong operational competencies, insights and learning, as a foundation for Credit Union Officers and aspiring leaders with regard to enriching their effective leadership and successful governance of their units.
Lincoln Jitman
TTCUDIFs Consultant Manager