Central bank stresses better savings and credit union management
Central bank stresses better savings and credit union management
The Bank of the Lao PDR stressed the need for savings and credit unions to enhance their financial management in order to sustainably expand business operations.
The central bank supported by the United Nations Capital Development Fund and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) yesterday held the annual Microfinance Stakeholder Forum 2014 in Vientiane to review and improve savings and credit union management. To guarantee the development and expansion of a savings and credit union, administrators should direct technical staff to always follow set procedures to verify the creditworthiness of their own customers for loans, the Vice Governor of the Bank of the Lao PDR Mr Sonexay Sithphaxay advised.
“Financial management and the issuing of loans should follow the regulations,” he said.
Some district and smaller units of credit unions had issued loans to people who were not members without thorough vetting and repayment supervision, which caused difficulties in the management of credit, according to the Financial Institution Supervision Department of the bank.
Some leaders of savings and credit unions still lack an understanding about the roles and duties in implementing the sector's rules and principles as well as deficient technical knowledge of accounting and finance.
“Employees' abilities in some units of credit unions had not kept pace with expansion of the services they offered, Director General of Financial Institute Supervision Department,” Dr Akhom Praseuth reported.
Meanwhile, some credit unions had not carried out sufficient supervision of loan approvals, were careless in implementing financial regulations and financial reporting was not clear and slow to the Bank of the Lao PDR.
“Some savings and credit union units were yet to use standard accounting practices,” he said.
The issue meant that the department could not analyse and calculate on-time financial reports each month.
In response, savings and credit unions needed to develop better and more sustainable practices, while the department would enhance the sector's regulations based on fact and increase understanding among the unions' staff, Dr Akhom said.
The department will continue to pay more attention to training and updating staff who manage the savings and credit unions as well as upgrading technology used for inspections and analysing documents.
The central bank would continue to organise the yearly meetings with the relevant sectors and local authorities to discuss ways to ease implementation of industry best practice. The department will also continue to cooperate with domestic and international supporters to ensure better planning in the improvement of the sector.
