Need to strengthen internal audit and supervision of people's credit fund activities

Capital continues to grow

Nghe An currently has 59 People's Credit Funds (PCFs) operating in 155 wards, communes and towns in 16 districts, cities and towns. In recent times, the PCF system has actively implemented restructuring solutions according to the restructuring project associated with debt settlement for the period 2016 - 2020. The activities of PCFs have helped members expand production and business, develop industries and services, create many jobs for members, contributing to hunger eradication, poverty reduction, and economic restructuring of agriculture and rural areas.

On the afternoon of January 6, the State Bank of Vietnam, Nghe An branch, organized a conference on People's Credit Funds in 2020. Comrade Le Hong Vinh - Member of the Provincial Party Committee, Permanent Vice Chairman of the Provincial People's Committee attended and gave a speech. Photo: Quang An

The total capital of the People's Credit Funds continues to grow, the capital structure is stable. By November 30, 2020, the total operating capital of the People's Credit Fund system in the area reached VND 8,967 billion, an increase of 17% compared to the beginning of the year. The average capital of each fund reached VND 151.9 billion.

Overview of the conference. Photo: Quang An

The capital mobilized from deposits within and outside the members has grown steadily, accounting for a high proportion of the total capital, reaching 8,066 billion VND, with each Fund mobilizing an average of 136.7 billion VND. The credit quality of the Funds is basically guaranteed, with the bad debt ratio within the allowable limit.

As of November 30, 2020, most Funds had deposits at the Cooperative Bank, amounting to VND 1,690 billion, accounting for 19.8% of total assets and tending to increase, creating conditions for Funds to be proactive in liquidity and demonstrate increasing prestige to members and people in the area. Most Funds are profitable in their operations.

Director of the State Bank of Vietnam, Nghe An branch, Nguyen Thi Thu Thu, speaks at the conference. Photo: Quang An

In recent times, the QTDND system has also effectively implemented Project 1058, Directive No. 06 of the Prime Minister, Resolution No. 42 of the National Assembly, and Circular No. 21 of the Governor of the State Bank.

Inspection, examination and supervision of the QTDND system are always carried out.State Bank of Vietnam, Nghe An Province Branchattention and identification as a key task in the management of the State Bank. Along with the inspection work, the supervision of the activities of the People's Credit Funds is also of interest to the State Bank Branch. Through the work of collecting, analyzing, evaluating statistical reporting data, combined with grasping the operational situation, the State Bank Branch has made many recommendations and issued many documents warning of risks and timely corrections.

Chairman of Dong Vinh Ward People's Committee, Vinh City delivered a speech. Photo: Quang An

Focus on management and internal audit

After listening to the presentations of a number of QTDNDs, relevant departments and branches, and giving directions at the conference, Standing Vice Chairman of the Provincial People's Committee Le Hong Vinh acknowledged and highly appreciated the efforts and achievements of QTDNDs in the area. In addition to contributing to supporting people and localities in developing agricultural and rural economy, the activities of the QTDND model in the area also contributed to increasing the local budget revenue. Specifically, in 2019, the amount of state budget contribution of the Funds was 11 billion 385 million VND, as of November 30, 2020 was 13 billion 457 million VND. Currently, many Funds have higher tax rates than many small and medium enterprises.

However, some Funds have not yet issued full internal regulations and rules or have issued them but have not yet reviewed, amended, or supplemented them in a timely manner to comply with current legal regulations. The understanding, research, and updating of documents, policy mechanisms, and the direction and management of the State Bank are still limited and have not yet promptly affected the implementation at the Funds.

Standing Vice Chairman of the Provincial People's Committee Le Hong Vinh gave a speech at the conference. Photo: Quang An

In the activities of the People's Credit Fund, the role of the government and local authorities is very important, but some Funds have not been able to take advantage of this and let the government and local authorities deeply intervene in the Fund's activities. Activities of lending, receiving collateral, mobilizing capital,treasury securityand financial accounting… still have shortcomings and violations.

To overcome the shortcomings, in the coming time, the State Bank of Nghe An province needs to continue to closely monitor the implementation of the restructuring plan associated with bad debt settlement of the People's Credit Funds, especially the implementation of solutions to improve financial capacity, credit quality, governance, management, control, and internal audit; promptly detect and adjust the plan to suit the reality.

Hung Dong People's Credit Fund - Vinh City has done a good job of mobilizing capital to promptly meet loan sources for members. Photo courtesy

The Standing Vice Chairman of the Provincial People's Committee also requested the State Bank of Vietnam, Nghe An branch, to closely coordinate with local Party committees, authorities and relevant functional agencies to find solutions to stabilize the activities of the People's Credit Fund to ensure security, politics and social order in the area; regularly inform and warn the Fund about new methods, tricks and violations in monetary and banking activities for awareness and prevention.

The Deposit Insurance agencies of the North Central region; the Cooperative Bank, Nghe An Branch... strengthen their roles and continue to closely coordinate, inspect, supervise, and ensure the safety of the People's Credit Fund system in the area according to the provisions of law.