The Central Bank has said it will allow credit unions undertake increased longer term lending, including home mortgage and business lending.
From January next year, new regulations will remove the existing lending maturity limits for credit unions which cap the percentage of their lending for periods of greater than five and ten years.
These maturity limits will be replaced by new concentration limits, on a tiered basis, for home mortgage and business loans, expressed as a percentage of total assets.
The volume of loans a credit union can issue will now be aligned to their asset size, which could enable many credit unions to double or treble their lending in certain loan classes.
The Central Bank said the changes provide those credit unions who have the financial strength, the competence and the capability, the flexibility to undertake increased longer term lending, including home mortgage and business lending.
The Central Bank's Registrar for Credit Unions, Patrick Casey, said today's changes follow a comprehensive review of the lending framework for credit unions.
Mr Casey said the changes form part of the Central Bank's commitment to ensuring a responsive regulatory framework.
"It is important that the lending framework remains appropriate for credit unions taking account of their risk management, capabilities, expertise and financial resilience," he added.
He added that where credit unions wish to undertake increased house and commercial lending, it is important that they understand the risks involved.
The Credit Union Development Association (CUDA) described the introduction of the new rules as a hugely significant development.
A recent survey commissioned by CUDA and conducted by iReach found that 70% of people said that credit unions can and should "take on the banks".
74% of adults surveyed believe that credit unions could make a bigger impact and should collaborate to compete with the banks.
Kevin Johnson, CEO of CUDA, said that up until now the level of loans the credit union could give out was based on the percentage of loans already issued.
He said this was holding credit unions back from providing more loans to support their members and their communities.
"Now the volume of loans will be based on a percentage of assets of the credit union. With an average of just 28% of assets currently lent out, the regulations will allow many credit unions to do more loans for more people," Mr Johnson said.
CUDA had lobbied for the changes since 2015, adding that they will bring much needed competition to the market for mortgages, home renovations and business loans.
But Mr Johnson also said he was disappointed that credit unions will be prohibited from supporting aspects of Government Housing Policy such as the Repair and Leasing Scheme.
"There is no logic to prohibiting credit unions from providing much needed loans to their members who want to help rebuild Ireland through the Repair and Leasing Scheme," he said.
"We are also disappointed with the limit put on the number of business loans a credit union can do, in a time when many credit union members are small businesses are crying out for funding," he added.