What is Caisse Populaire?
Caisse Populaire is a French Word for ‘Credit Union’ and simply refers to financial institutions that are owned and controlled by its members. These institutions perform similar activities as banks but are limited to providing services only to its members. At times, based on member needs, the institutions may perform additional services, such as investment advisory, as well. Caisse Populaires are mostly found in Canada, with the majority of them being focused in the province of Quebec.
How does Caisse Populaire Work?
Caisse Populaire may be formed by a group of people with a common interest – usually, these are formed by people living in the same community. The members of Caisse Populaire pool their money together (deposits) and use it to provide loans and other financial services to its members. The board of directors is elected democratically with each member getting one vote regardless of the size of their deposits or investments.
As these institutions work towards the welfare of its members and are not profit-oriented, the fees charged are considerably lower. Unlike major banks, these institutions would be more likely to charge lower interest rates on loans while offering higher interest rates on their deposits. Any profit earned by these institutions would be shared by its members.
Types of Services at Cassie Populaire
Similar to a regular bank, the following services are offered at Caisse Populaire –
- Checkings Account
- Savings Account
- Certificate of Deposit
- Online Banking
- Loans
- Credit Cards
However, these services are offered only to the members and not open to the general public.
Example of Caisse Populaire
Caisse Populaires are both provincially as well as federally regulated in Canada. Each province (with the exception of a few) has its own legislation relating to the incorporation and operations of credit unions. The bank act of 2012 provided for the setting up of Caisse Populaire on a federal scale and as such the uni financial corporation became the first federal credit union of Canada in 2016.
The credit unions at Quebec, Canada is formally federated into the Desjardins group. The Desjardins group was established in 1900 by Alphonse Desjardin, headquartered in Quebec. It is currently the largest federation of credit unions in North America. Other than the traditional banking services, the group also offers additional services such as insurance, real estate, brokerage, through its subsidiaries.
Advantages of Caisse Populaire
- Customers are Members: In a credit union, the members are customers are one and the same. Therefore, the policies and services would be highly customer friendly.
- Welfare Oriented Model: Since the Caisse Populaires do not work on a profit-oriented model, there is no constant drive to increase profits on all possible fronts. Rather, these institutions offer a lower rate for loans in order to benefit the members of the society.
- Charges are Lower: A Caisse Populaire does not charge any fees for its services since all the services are provided only to the members.
Disadvantages of Caisse Populaire
- Poorer Technology: They have lower assets and deposits. They do not possess sufficient funds to technologically compete with major financial institutions or banks. Therefore, they tend to be a quite old school in their practices and offerings in relation to technology.
- Location-Oriented: Caisse Populaires was introduced with the aim of catering to the needs of members of a particular community. These communities were generally geographically concentrated. Therefore, the services of such credit unions are more likely to be concentrated within a particular geographical area. They are less likely to have worldwide branches and provide banking services from anywhere across the world.
- Lesser ATMs: Automated Teller machines have reduced the strain on manual banking services greatly. However, Caisse Populaires are less likely to offer wider atm facilities as compared to a regular bank.
- Restricted Membership: They offer services only to their members. Gaining membership into these credit unions is highly restrictive and is not open to the general public. Therefore, non-members cannot enjoy the benefit of the services of credit unions.
Conclusion
Different forms of credit unions exist all over the world. Caisse Populaire is one of the most popular and effective financial institutions in Canada. Though the system comes with its limitations, with the increasing regulations and technology, these may be easily overcome.
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