What is a savings and loan cooperative?
Savings and loan cooperatives (SOCAP) are non-profit entities whose corporate purpose is to offer financial services. They are inserted into a worldwide movement of a social nature, called cooperativism , which gives it some special characteristics. This article allows you to know in detail what a savings and loan cooperative is, and what its characteristics are.
In Mexico there are more than 600 Cooperative Savings and Loan Societies (SOCAP) between authorized and unauthorized; From them we hear that some appear or disappear, merge or absorb them, are regulated or are not, expand or break, etc .; However, despite the fact that the savings and credit sector is 62 years old in our country, it has not been until the last 15 years that it has grown and made itself known in an important way.
What is the cooperative movement?
The cooperative movement is a current that promotes cooperation in the social rank of its members. This is done through voluntary associations called cooperatives, which allow them to obtain greater benefits for the satisfaction of their needs.
Although the movement is social in nature, it encompasses an economic aspect, promoting the financial association of people. This, through credit unions, popularly called as town banks .
Who regulates savings and loan cooperatives in Mexico?
The National Banking and Securities Commission and the Auxiliary Supervision Committee of the sector.
What services does a credit union offer?
The main services offered by SOCAP are:
- Savings accounts It offers you this service, usually without setting a minimum amount, or charging maintenance fees. Some allow the opening of accounts in dollars and pay interest regardless of the amount saved.
- Time deposits . You can place your money on a fixed term and choose if you charge interest generated monthly or at the end of the term.
- Loans Depending on the capital available to each SOCAP, you can offer different loan modalities. The so-called micro-loans stand out, which are personal loans for low amounts and low fees and do not have excessive requirements. Some cooperatives even grant mortgage loans and home equity loans.
- Contributions A few SOCAPs offer the opportunity to become a member of the cooperative, through a capital contribution. Your contributions are placed in your own contribution account and delivered to you at the time you decide to withdraw. These contributions work as collateral when you apply for a loan in the corresponding SOCAP.
Characteristics of cooperatives
• Simple alternative to access savings and credit with more viable and favorable conditions.
• Interest rates offered are competitive with those of other financial institutions.
• Some provide education and training to people (cultural savings and credit programs).
• Presence in rural areas.
• They allow small amounts to be deposited and grant smaller loans than traditional banks.