ALEXANDRIA, Va. (1/22/16)--An agreement between the National Credit Union Administration (NCUA) and U.S. Treasury will allow low-income credit unions a streamlined process to become certified Community Development Financial Institutions (CDFIs). The two agencies signed a memorandum of agreement Thursday at the NCUA’s Alexandria, Va.headquarters.
Financial institutions that serve low-income and underserved communities are eligible for CDFI certification by the Treasury. Once certified, credit unions can access training and grant programs provided by the CFDI Fund, resources which can aid the institutions in increasing products and services geared toward underserved communities.
“Credit unions are using CDFI grants to pilot lending and product expansions to serve people who may not have access to traditional financial products,” said NCUA Chair Debbie Matz at the signing. “CDFI grants allow credit unions to innovate and develop unique products geared to meeting the needs of low-income members."
“However, some credit unions that would qualify as CDFIs have chosen not to apply because they have found the CDFI certification process would be time-consuming and expensive for them to complete on their own,” Matz added.
There are 295 credit unions among roughly 970 certified CDFIs. The majority of these also hold the NCUA’s low-income designation.
“Many low-income credit unions already qualify to be certified as a CDFI, they just don’t realize it," said CDFI Fund Director Annie Donovan. “By completing this memorandum of understanding, the CDFI Fund and NCUA will be able to work together to raise awareness of CDFI certifications and the work that CDFIs do, leading to many more credit unions becoming certified.”
Donovan added that credit unions are the fastest growing type of CDFI and said the CDFI Fund is looking forward to increasing that growth.