Credit unions see rise in demand for loans

Latvia’s Association of Cooperative Credit Unions board chair Olga Kazačkova affirmed that since the beginning of the year most credit unions have seen an increase in demand for credit, reported newswire BNS Wednesday.

“After a quiet period since last September, we’ve noted a pick-up in interest among potential borrowers,” said Kazačkova.

She went on to say that the largest of Latvia’s credit unions are planning a period of active 5% average growth, whereas some of the smaller credit unions in the countryside are even looking forward to 25% rates of growth, hoping that the “Leader” program project competitions and demand from self-employed persons, farming homestead enterprises and individual merchants will increase.

Kazačkova explained that credit unions find it hard to compete with non-bank lenders, also known as 'instant credit', which can hand out loans more quickly but often continue to inadequately take into account their clients’ creditworthiness before luring them into serious financial liabilities.

“They aren’t required to verify the purpose of the loan and what it’s spent on. Credit unions often are faced with the aftermath of bad non-bank loan decisions – many residents have wound up in dead-end situations, many of them young people with families,” she said.

She added that oversight institutions have increased their reporting demands as well, but smaller credit unions lack the capacity to follow up on all the requirements.

The Association of Credit Unions was established in October 1997 and includes 29 members among Latvia’s 32 registered cooperative credit unions.

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