81% of Asian credit union leaders who participated in a joint World Council of Credit Unions (WOCCU) and Association of Asian Confederation of Credit Unions (ACCU) webinar say their national regulator has taken steps to provide regulatory relief due to the coronavirus (COVID-19) crisis—helping more credit unions serve members and provide needed resources for their local communities.
That was one of several revelations to come out of the April 20 webinar, which featured presentations by professionals from:
- World Council
- Association of Asian Confederation of Credit Unions (ACCU)
- National Association of Credit Cooperatives (NATCCO) - the Philippines
- Nepal Federation of Savings and Credit Cooperative Unions Ltd. (NEFSCUN)
- National Cooperative Bank Limited (NCBL) - Nepal
Credit union leaders who responded to a poll during the webinar were in unanimous agreement that regulators have provided the most relief in allowing flexibility in the areas of loan restructuring and documentation.
However, less than half of those surveyed said their regulator had provided relief in other areas, such as reducing provision requirements, easing restrictions on correspondent bank services to credit unions and allowing for temporary cash or payment services to non-members.
Liquidity and safety concerns
As we’ve seen throughout the global credit union system, Asian credit unions also cite liquidity as their number one concern—with massive withdrawals by members causing some financial cooperatives to close temporarily.
NEFSCUN CEO Shivajee Sapkota said many credit unions in Nepal are now limiting member cash withdrawals to US $250 per day in order to remain solvent.
Other credit unions in the region have closed temporarily over safety concerns—with long lines in smaller villages making it difficult to maintain safe social distancing. The remaining closures have been forced on credit unions by national and provincial governments.
Over half of all credit unions in the Philippines are currently closed, with the most closures (62%) coming on the archipelagic nation’s most populous island of Luzon, according to NATCCO CEO Sylvia Okinlay-Paraguya. NEFSCUN estimates about 70% of the credit unions in Nepal are still open, with limited hours and service.
Still doing global good
Okinlay-Paraguya said the credit unions that remain open in the Phlippines are not only serving members but using a percentage of their net surplus to provide food, medical supplies and more to their local communities. NATCCO credit unions are also working with the national government to help distribute US $200 million worth of government subsidies to communities.
In Nepal, NEFSCUN credit unions contributed US $5,000 to set up a COVID-19 testing lab. NCBL CEO Badri Kumar Guragain said financial cooperatives have also organized blood donation programs, distributed health and sanitary items to members, and delivered food to orphans and the elderly.
Need for greater digitization
ACCU CEO Elenita San Roque, who moderated the webinar, said the crisis has emphasized the need for more credit unions to provide digital services, like online and mobile banking, and online lending.
56% of credit union leaders surveyed said their members have access to digital transactions and payments, but just 11% reported offering digital lending or online loan applications.
Once the crisis ends, San Roque and others said credit unions need to be ready for an influx of members seeking cash withdrawals and loan assistance. Many on the webinar stressed the need for credit union associations to prepare their member institutions for that now.
The webinar also included presentations by several World Council professionals, including:
- President and CEO Brian Branch
- Vice President of Advocacy Andrew Price
- Vice President of Financial Inclusion Megan O’Donnell
NEFSCUN is a direct member of World Council of Credit Unions. Both NATCCO and NCBL are members of ACCU, which is an associate member of World Council.