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Definition: Credit Union
A credit union is a financial co-operative which is governed by its members for the purpose of providing liquidity at competitive rates and other financial services to its members. Many credit unions extend their services for societal development and investment in other sustainable technological developments. Credit unions vary in terms of number of participating members and total assets. Some credit union work alongside other Non Governmental organizations indulging in co-operative banking and providing strong financial backing for grass root development.
Similarly a federal credit union is controlled and supervised by the National Credit Union Association, a federal government agency. All the members are also partial stakeholder of the institution. The federal credit union operate under the laws of federal credit laws instead of state banking laws. The participating members get higher interest rates on their savings and lower borrowing cost as compared to customers at other traditional branches.
The board of directors are elected by voting. Each member vote are equally weighted, irrespective of the amount invested by its members. Most credit unions are society oriented and not profit oriented.
On a global basis, the number of credit unions are estimated to be around 52000. there are about 200 million members and transact in 15 trillion USD worth of assets. United tops the list with maximum number of credit unions followed by India, Canada, south Korea and Kenya completing the top 5 nation. Poland was the first nation to adopt the system of credit union.