The number of credit union branches has been slashed in half despite the huge contraction in retail banking, new figures show.

The decline has been branded 'surprising' given the Government's vocal concern over the fall in the number of retail bank branches across Ireland.

Social Democrats TD Holly Cairns said credit unions need to be supported, but warned: "Unfortunately, the legal and regulatory framework has not reflected this. There is a disconnect between the Department of Finance's responsibility for credit union policy, and the Central Bank's role in terms of regulation. They have excessive limits on their services and potential."

Ms Cairns also said that excessively harsh rules governing credit unions included "artificial and anti-business controls in place on how much credit unions can lend".

She added that credit unions "have never been so important" as rural banks close. She said: "They offer accessible services with branches in towns and villages, at a time when commercial banks are leaving the Irish market and the remaining banks are closing rural branches. They provide local services and help whole cohorts who would otherwise be financially excluded."

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Labour finance spokesman Ged Nash said: "In a scenario where banks are closing at a ratio of one closure a week, we should be proactively trying to generate competition and new branch openings. The Government should be encouraging the creation of new credit unions instead of allowing them to wither away."

The figure emerged after Ms Cairns asked Finance Minister Paschal Donohoe how many credit unions have closed or amalgamated since 2010.

Ms Cairns also asked the minister what policy and regulatory framework has required credit unions to amalgamate with other credit unions.

Mr Donohoe revealed the number of credit unions has halved in a little over a decade, saying the Central Bank told him: "The total number of actively trading credit unions has decreased from 415 as of January 1, 2010 to 210 as of March 4, 2022 - a reduction of 205." He said that in the "significant majority of cases" the decrease was brought about by credit unions amalgamating with others.

"A total of 190 credit unions engaged in voluntary transfers of engagements over the period," he said. "Of the 190 transfers, 82 were aided by the Credit Union Restructuring Board, which operated from 2013 to July 2017."

Although the number of credit unions has halved, Mr Donohoe said this had not resulted in a halving of the number of branch offices.

He said a Central Bank review of credit union restructuring had found that, although the number of credit unions fell by 35% between 2013 and 2018, "there was only an 8% reduction in business locations operated by credit unions".

Mr Donohoe also revealed just 15 credit union closures were due to a lack of financial sustainability.