Financial co-ops get technical assistance

By Jun Vallecera

Reporter

LOCAL authorities are getting help from abroad to put financial order in the chaotic world of financial cooperatives around the country that take the depositor’s money but is rarely held accountable for it. The president of the nongovernment organization called Emerge said Thursday that some 28,000 financial cooperatives receive money from the public. Mario B. Lamberte, team leader for banking and capital markets at Emerge, said in an interview the danger lies in the fact that financial cooperatives are rarely held to account for themselves when making financial transactions. “Financial cooperatives are the least regulated among institutions and those that are actually examined fail to meet even the most basic of prudential standards,” he said. Help comes in the form of a technical assistance from the United States Agency for International Development (USAID) worth $500,000 or P24 million at the current rate of exchange. The money will help fund the training of personnel of the Cooperatives Development Authority on the basics of financial operations and responsibility that comes with lending money. “This money is for a complete regime change and help convert a very weak agency into an effective and efficient regulator,” Lamberte said. The bulk of CDA’s time and resources is spent on the settlement of disputes rather than enforcing regulatory standards deposit-taking institution are expected to observe, the former executive at the Philippine Institute for Developmental Studies, a government think tank, said. The CDA merely registers applicant institutions and rarely ever takes the time to read what the institutions have written on the blank spaces, according to Lamberte. This was why cooperative executives often engage in self-dealing transactions or in so-called DOSRI loans with the CDA none the wiser for it, he said. And because cooperatives get away with financial murder by remaining under loose CDA supervision, there was no incentive for them to upgrade to the level of banks where tight Bangko Sentral ng Pilipinas supervision keeps the industry on its toes 24/7, according to Lamberte.

 

http://www.businessmirror.com.ph/0420&212007/economy04.html