Need to "blow the whistle" on cooperatives that operate internal credit against regulations
(Baonghean.vn) - That was the issue raised at the meeting of the Provincial People's Council Standing Committee with the State Bank of Vietnam, Nghe An branch on the afternoon of April 12 under the program to monitor the operational efficiency of cooperatives in the province.
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| Comrade Hoang Viet Duong - Vice Chairman of the Provincial People's Council chaired the meeting. Photo: Minh Chi |
According to Director of the State Bank of Nghe An branch Nguyen Thi Thu Thu, according to reports from localities, as of December 31, 2016, in the province there were 12 cooperatives registered for internal credit activities.
On the positive side, internal credit activities contribute to solving the difficult need for capital, helping cooperative members to have conditions to develop production, reducing the situation of usury in rural areas; contributing to increasing profits for cooperatives.
However, according to Ms. Nguyen Thi Thu Thu, through reviewing the internal credit of cooperatives and the annual reports of the People's Committees of the districts, it shows that the internal credit activities of cooperatives have some violations and problems, such as all units using more than the permitted capital for lending; some cooperatives lend to members an amount exceeding 5% of the charter capital in money used for internal credit activities according to regulations.
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| Director of the State Bank of Vietnam, Nghe An branch, Nguyen Thi Thu Thu, said that it is necessary to "blow the whistle" on cooperatives that have internal credit activities that violate regulations. Photo: Minh Chi |
Some cooperatives are large in scale with 30 - 40 billion VND, while no agency or sector has been assigned the responsibility of managing and directing credit operations, creating great potential risks in this activity.
From that reality, the Director of the State Bank of Nghe An branch proposed that the Standing Committee of the Provincial People's Council give opinions to all levels and sectors to strengthen the management of this type; at the same time, it is necessary to "blow the whistle" on cooperatives with internal credit activities that violate regulations.
Currently, in addition to the Nghe An branch of the Cooperative Bank, the whole province has 59 people's credit funds, operating in 16 districts, cities and towns. As of December 31, 2017, total capital mobilization reached VND 4,921 billion, an increase of 295% compared to 2012; total outstanding loans reached VND 5,088 billion, an increase of 300% compared to 2012; the difference between income and expenses was VND 48 billion; bad debt accounted for 0.6% of total outstanding debt.
Average equity reached 7,356 billion VND and average charter capital reached 5,094 billion VND/cooperative. In the province, there is no people's credit fund that must be put under special control.
At the meeting, the leaders of the State Bank of Nghe An branch also clarified many issues raised by the members of the monitoring delegation of the Provincial People's Council Standing Committee such as: difficulties in converting the type of internal credit of cooperatives; plans, roadmaps and solutions for establishing credit funds in 5 districts where there are no activities of people's credit funds...
Concluding the meeting, Vice Chairman of the Provincial People's Council Hoang Viet Duong highly appreciated the direction, management and guidance of people's credit funds to operate in accordance with regulations and with high efficiency.
Pointing out a number of shortcomings and limitations, the Vice Chairman of the Provincial People's Council said that in order to continue to better manage the activities of people's credit funds, the State Bank of Vietnam, Nghe An branch, should strengthen coordination with sectors and localities to strengthen inspection, control, proactively warn and prevent risks at credit funds as well as support internal credit activities of cooperatives to operate in accordance with regulations.
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| Transaction counter at Dien Ky People's Credit Fund, Dien Chau district. Photo: Minh Chi |
Regarding the 5 district-level units that do not have an operating credit fund, the Vice Chairman of the Provincial People's Council requested the State Bank of Nghe An branch to coordinate with localities to conduct field surveys, assess capabilities, and from there have orientations to establish funds in these localities; at the same time, pay attention to improving internal audit, controlling revenue and expenditure at funds; strengthen training and professional guidance for fund management teams; combine training and proactively create a source of staff at funds...