Research Outline

Credit Union Creation Process


To find out the process for the creation of a credit union as compared to a Bank in the US, including the compliance/regulatory requirements. This would also including the lenght of the process, and the different governmental approval needed for the creation a credit union. The aim being to evaluate whether creating a credit union is much more feasible than creating a bank.

Early Findings

Steps to Create a Credit Union

  • The first step in creating a credit union in the US is the organization of a Committee who will establish the entity. It is desireable that members would have some financial experience but it is not a requirement.
  • The second step involves the decision to define the common bond for its membership, as credit unions are contrained by the type of customers they can work with.
  • The third step is to establish if members of the common bond are interested in founding a credit union.
  • In the fourth step, a choice will have to be made for the services that the credit union will provide. A credit union can be basic or full-service.
  • Newly created credit unions are usually basic service, offering current account, consumer loans and savings.
  • Full-service credit unions will offer business loans, check cashing as well as retirement accounts.
  • It is possible to contact the National Small Credit Union Program to have access to technical assistance, training, as well as best practices, through a local examiner that will be put in contact with the credit union.
  • The other steps involve hiring qualified managers, evaluating starting costs and putting together a full business plan.
  • Credit unions can either be state credit unions or federal credit unions.
  • The National Credit Union Administration (NCUA) is the US body responsible for the regulation and supervision of federal credit unions.
  • It is the body that charters federal credit unions, or gives them a licence to operate.
  • Chartering requirements for federal credit unions include a commond bond, members with a good character and an economically sound plan.
  • There is an Express Chartering Procedure available to applicants, wich facilitates the process by providing a model for a business plan, and standard forms.
  • Federal credit unions have to comply with approved bylaws in the US, these can be requested by writing to
  • State credit unions are regulated by the financial services division of their state.
  • Some states do not have specific regulations, such as Arkansas, Delaware, South Dakota, Wyoming and the District of Columbia, and credit unions in those juridictions have to adhere to federal regulations.
  • Credit unions are exempt from taxes, and have to narrow their membership to some specific groups to keep this status.
  • Banks also need to be granted approval for a federal or state charter.
  • The requirements to obtain the charter are economical, and financial.