Businesswoman spearheads FS co-op bank

The idea comes from stokvel’s; to establish a cooperative bank you have to be about two hundred members and more than a hundred thousand in the bank for the government to recognise you

Local business woman, Nomsa Marchesi, has heeded government’s call for establishment of more cooperative banks in South Africa, and is leading about 60 other investors who are on a mission to set up such a bank in Bloemfontein.

A cooperative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank.

Cooperative banks are often created by persons belonging to the same local or professional community or sharing a common interest. The banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking accounts).

Cooperative banks were first established in Europe and were called Credit Unions. In South Africa, cooperative banks are recognised by the Cooperative Bank Development Agency (CBD) which works under the National Treasury.

Marchesi believes that establishing a cooperative bank in the Free State will benefit a wide spectrum of people in the province.
“This bank will be for everyone: the unemployed, employed, business people and wealthy people who can actually be able to inject money. Its aim is to make banking easily accessible, especially for individuals who are normally referred to as the unbanked.

“For the first time in the Free State individuals are going to be part of their own bank, because not only will you have bank shares, but you will also learn how to save money,” said Marchesi.
Currently, there are only two cooperative banks in South Africa that are registered in terms of the Co-operative Banks Act, and 19 are being considered for registration. According to the Banking Association, the cooperative financial sector is worth R 170-million.

Marchesi said the idea to start a cooperative bank struck her after the National Treasury challenged capable women from disadvantaged backgrounds to start banks
“The idea comes from stokvel’s; to establish a cooperative bank you have to be about two hundred members for the government to recognise you, and also have more than a hundred thousand in the bank.”
She said cooperative banks are not too different from commercial banks.

“Cooperative banks are very similar to your high-street banks; the only difference is that they are formed by individuals who then become shareholders. In this instance, you do not have shareholders who would come in and inject money like commercial banks.

“The whole idea of cooperative bank is to operate the same way that commercial banks are run. We will also be giving the same services as commercial banks. The only difference is that for you to become a member you have to own shares in the cooperative bank.”

Some of the benefits of cooperative banks include lower interest rates than commercial banks and it also allows people to have easy accessibility to banking.
“Commercial banks can charge you a lot of money in bank charges. With cooperative banking it is the individuals who decide on how they want to be charged; everything goes by voting. One share will cost R500 and 200 members will decide on our loan policy.”

Co-operative banks and financial institutions have several pieces of legislation and regulatory mechanisms overseeing the sector.

The Co-operative Banks Act, No 40 of 2007 (the Act) defines a co-operative bank as a co-operative registered as a co-operative bank in terms of the Act whose members:
Are of similar occupation or profession or who are employed by a common employer or who are employed within the same business district; or
Have common membership in an association or organisation, including a business, religious, social, co- operative, labour or educational group; or
Reside within the same defined community or geographical area.

The Act has sought to create a development strategy and a regulatory environment for deposit- taking financial co-operative institutions.
“The supervisor within the Co-operative Banks Development Agency has the authority to exercise the powers and perform the functions conferred on the supervisor by or in terms of the Act in respect of primary co-operative banks that hold deposits of less than R20m and more than R1m and has 200 or more members.”

There are two tiers of co-operative banks. But the Act which applies to co-op banks can be applied to other types of co-operatives regulated in terms of the Co-operatives Act and which provide certain financial services.
Marchesi said the structure itself will have management and board of directors who will ensure that policies are drafted accordingly. Interested individuals are requested to contact 051 446 1696 or 051 436 4331.