Savings, credit unions fail to track BOL's guidelines
Savings, credit unions fail to track BOL's guidelines
Many savings and credit unions across Laos failed to follow the guidelines of the Bank of the Lao PDR (BOL), causing ineffectiveness in the provision of loans and other monetary services, according to BOL's report.
“There are many reasons why savings and credit unions in Laos are not strong or effective because many of them failed to obey the regulations issued by BOL,” a senior bank official reported recently.
He said some of them granted loans to customers who are not members of the unions, causing them difficulties in collecting capital and revenue.
“Many newly-established savings and credit unions were unable to continue operations because they didn't follow the directions of BOL.”
“When they got into difficulties, BOL withdrew their licenses for operation and they were asked to improve themselves if they wish to re-run their businesses,” he said.
As one of the key essentials for Laos' economic development and to boost poverty reduction, BOL anticipates that it will work harder to promote savings and credit unions by continuing to build capacity for savings' staffers to ensure they understand the regulations and strictly follow the guidelines.
In his opening speech at the Savings and Credit Union Forum 2015, BOL Deputy Governor, Sonexay Sitphaxay said the government has prioritised this sector as a key contributor to the nation's socio economic development.
“It is also important for poverty reduction and helping the country to graduate from the world's least developed countries by 2020,” he said.
He went on to say that BOL is assigned by the government to translate the directives into practical action through cooperation with international organisations domestically and globally.
The forum not only aimed to highlight the past achievements of the savings and credit union sector but it also set out to improve the legal processes to manage savings and credit unions for better operations in accordance with government directions.
At the same time, BOL will upgrade the technical skills for management personnel to ensure they are equipped with professional skills close to regional and international standards.
According to the past year's evaluation of BOL, the savings and credit unions have significantly contributed to poverty reduction over the past year but BOL will continue to help them in building capacity for staffers who are working in this sector.
“If comparing Laos' savings and credit union sector with other Asean countries, we still need a lot of improvements in terms of quantity and quality because their professional skills are limited,” he said.
Mr Sonexay added that BOL will continue to pay special attention to the improvements of the necessary policy in order to provide facilities to boost the growth of this sector.
Currently a total of 31 savings and credit unions are under the supervision of BOL, with their total assets having increased 45.11 percent while members of the unions also increased 11.45 percent when compared to the year 2014.
In addition, the unions loaned to the three major sectors including services, agriculture and industry and handicrafts.
The forum was co-organised by the BOL and UNCDF's Making Access to Finance more Inclusive for Poor People programme.
