00:00More than 15 years after the collapse of the Hindu Credit Union and CLECO, failures which cost the country over $30 billion, the central bank is reporting continued pushback from the sector as it relates to efforts to implement reform.
00:17You want to ensure that persons who are making those decisions, they have not necessarily financial acumen to the level that you may see in another financial entity, but they have understanding of financial statements, etc.
00:34So there was pushback on things like that when it came to governance, requiring some minimum requirements that would see board members having to do probably some training, etc.
00:50Over the years, efforts to establish the central bank as a regulator have failed.
00:55There was some work done by the IMF in producing a report for the sector, and the way forward that was determined by the authorities at the time was to have an independent regulator for the sector.
01:11However, that is yet to be realized. In the meantime, the Ministry of Labor and Small and Microenterprises oversees the sector to an extent.
01:20However, the Ministry acknowledges that it does not have all the requisite skill sets.
01:25Against the backdrop of a $20 billion industry, and the fact that we all lived through the collapse of the Hindu Credit Union,
01:36it is very worrying to know, at least to be told, that there are no monitoring and evaluation systems at the Commissioner's office.
01:50How do you track compliance trends? How do you track emerging risks? What are your early warning signals, for instance?
02:05The central bank notes that the Cooperative Societies Act has critical gaps.
02:10Given that the central bank has acknowledged that credit union shares and deposits are not subject to mandatory deposit insurance,
02:19and that membership in the Credit Union Deposit Insurance Fund remains voluntary,
02:25could you tell us what percentage of credit union members, if you know, are protected by the Credit Union Deposit Insurance Fund?
02:33In the meantime, penalties for infractions attract a paltry $2,000 fine under the 1971 Act,
02:55prompting stakeholders once again to push for legislation.
02:59Assets of $20 billion. So if we have that quantum of assets, I mean, I wouldn't even bother to sneeze at a $2,000 fine.
03:08I mean, it's not even worth sneezing at. So again, making the case that perhaps we need to revisit so that it is fit for purpose.
03:18But despite all this, the central bank is not waving the red flag.
03:24At this particular point in time, in your estimation, is this a high-risk sector to be in?
03:30I wouldn't say it's a high-risk sector, no. But there is risk, of course, to the depositor or shareholder.
03:37Renessa Cutting, TV6 News.
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