The development of two legislations to bring credit unions under the regulatory ambit of the Bank of Jamaica (BOJ) remains ongoing as the near-$200 billion-industry continues merger activities.

The country’s 23 credit unions are currently regulated by the Department of Co-operatives and Friendly Societies (DCFS). Passage of the Co-operative Societies Amendment Bill and the Credit Unions (Special Provisions) Bill will shift oversight from the DCFS to the BOJ. Both legislations would also create a licensing regime for credit unions by the Ministry of Finance & Public Service (MOFPS).

“The development of the [Special Provisions] Bill is at an advanced stage and the Bill is under review by the necessary stakeholders. Accordingly, the BOJ is in the process of reviewing operating structures and resourcing needs within the organisation to ensure that the supervisory regime for credit unions can be adequately executed under the proposed expanded mandate. In the interim, prudential supervision of the credit union sector will remain with the Department of Cooperatives and Friendly Societies,” according to the Government of Jamaica’s (GOJ’s) March 2025 Annual Report (Form 18-K) submitted to the United States Securities and Exchange Commission (SEC).

The special provisions bill sets out the framework and regulations to bring credit unions under the BOJ’s prudential supervisory regime. The Bill covers items like licensing, capital, reserves, prohibited business, remedial and intervention processes. The Bill also addresses the role of specially authorised credit unions.

“Accordingly, this Bill includes provisions that will restrict the deposit-taking activities of co-operative societies to those co-operative societies, which operate as credit unions. Other substantive enhancements to the Co-operative Societies Act are contemplated by the Ministry of Industry, Investment and Commerce (formerly Ministry of Industry, Commerce, Agriculture and Fisheries (“MICAF”) which is the ministry with portfolio responsibility for cooperative societies,” the GOJ annual report added on the amendment bill.

The development of the amendment bill is ongoing while the special provisions bill is currently well advanced.

Talks of BOJ regulating credit unions has been ongoing for over a decade, but the provisional regulations have already resulted in several mergers. Community and Workers of Jamaica Co-operative Credit Union Limited and COK Sodality Cooperative Credit Union Limited merged on December 1 while Gateway and EduCom Co-operative Credit Union merged on February 1 to form Infiniti Co-operative Credit Union Jamaica Limited.

Even the Insurance Employers Co-operative Credit Union Limited has proposed a resolution to its members to empower the board to engage in merger discussions. This will be discussed at the hybrid special general meeting to be held on August 14 at The Summit (formerly Knutsford Court Hotel).

The various mergers in the space expands the market share of each credit union and deepens the capital base of the combined entities. Co-operatives that are part of the Jamaica Cooperative Credit Union League Limited (JCCUL) are currently required to hold an eight per cent ratio of institutional capital to total assets and allocation of at least 20 per cent of the net surplus (net profit for credit unions) to institutional capital.

According to the BOJ’s 2024 annual report, “The Jamaica Cooperative Credit Union League Limited (the League) is a cooperative society owned by credit unions, which provides financial, technical support and other services to the credit union sector.”

However, the proposed regulations with BOJ supervision would require JCCUL members to hold a minimum six per cent ratio of regulatory capital to total assets and maintain a ten per cent ratio of total regulatory capital to risk-weighted assets. These proposed capital requirements along with additional Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation Financing regulations are expected to be onerous on smaller credit unions.

Credit union assets grew 10 per cent in December 2024 from $180.3 billion to $198.6 billion when there were 24 entities and 104 branches and sub-branches. The loan portfolio increased 13 per cent to $137.4 billion with the capital base at $21.3 billion. Credit union assets were $124.6 billion in 2019 when there were 25 entities with 108 branches. Loans were $91 billion with capital of $15.4 billion.