Teacher union now has its own bank, but ‘be careful’
There are advantages to co-operative financial institutions, but one economist has a few warnings
New players in SA’s banking industry – such as teacher union Sadtu’s new banking licence – offer cheaper opportunities to clients but should be treated with caution, experts say.
The SA Democratic Teachers Union recently announced it had been granted a licence by the Reserve Bank’s Prudential Authority to run as a cooperative financial institution (CFI), but economist Dawie Roodt said he had doubts about whether it would be able to run its licence properly.
The Reserve Bank said that for an institution to be granted a license to run a CFI it needed to meet minimum requirements including a common bond – which in Sadtu’s case is its trade union membership. It needed a minimum of 200 paid-up members and R100,000 in share capital. The licence allows it to receive savings money and grant loans to its members...