The National Credit Union Administration announced Wednesday that it is chartering the Maun Federal Credit Union in Kendall Park, N.J. to serve a local Islamic community.
The credit union expects to open in June. It is the first new federal credit union to be chartered this year, the agency said.
The credit union will not charge interest on loans, which will be fee-based, according to its website. Credit union officials said they made that decision following extensive consultation with Islamic financial services officials.
“Appropriately enough, ‘Maun’ means ‘small kindness,’ which is an apt way of describing a credit union’s mission,” NCUA Chairman Todd Harper said. “The organizers recognized the unmet need for financial services in their community and set about to create a solution through the credit union cooperative business model, tailored specifically for their members.”
The credit union will serve employees and members of the New Brunswick Islamic Center in New Brunswick, New Jersey, and employees and members of the Islamic Society of Central Jersey in Monmouth Junction, New Jersey.
During its first year in operation, the credit union will focus on non-interest-bearing consumer loans, as well as share savings accounts, direct deposit services, money transfers and notary services. The credit union said that all loan fees would be used to cover the expenses associated with operating the credit union. Loans will not be financed, sold, or supported by third-party financial institutions.
“All other aspects of banking transactions and loans will also adhere to religious and ethical banking principles,” the credit union said on its website. The banking model being used by Maun was developed after consultation with Islamic scholars, Islamic bankers, Islamic loan providers and other credit union officials.
The new credit union has a mentoring agreement with Jafari No-Interest Credit Union, a federally insured, state-chartered credit union in Houston, TX., which has a similar no-interest, fee-based business model. Jafari helped Maun with its business plan during Maun’s charter application process.