The government of Singapore has launched a public consultation to gather views on proposed changes related to the regulation of credit co-operatives.
There are currently 27 credit co-operatives in Singapore. In 2013 they had 142,000 members, SGD $756.5m in members’ deposits and SGD $14.6m in members’ share capital. The net assets of credit unions also reached SGD $153m, while total loans given out by credit co-ops amounted to SGD $185.5m.
Throughout the years the sector has grown both in terms of membership and deposits. The legislation was amended in 2008 and to date almost all credit unions have met or are on the track of meeting the prudential requirements issued by the Registry.
The changes would be fully implemented by 2018. The consultation document highlighting the proposed recommendations underlines the important role played by credit co-operatives in providing saving and credit services to people across Singapore.
“As credit co-ops take in deposits from and give out loans to members
who are generally average income earners who cannot afford to lose their savings, credit co-ops must be financially sound and professionally run so as to safeguard members’ interests,” reads the document.
The proposed recommendations aim to raise prudential standards and promote compliance, improve governance standards and enhance regulatory powers to deal with distressed and errant credit co-operatives.
In terms of raising prudential standards and promoting compliance, the government is looking at raising requirements for Minimum Liquid Assets ratio from 13% to 15% and the Capital Adequacy Ratio from 8% to 10%. It also proposes to empower the Registry to take regulatory action against non-compliance of prudential requirements.
One other area of focus is governance. The recommendations suggest updating the Code of Governance of 2006 to include guidelines on risk governance covering internal controls, loan management and investment management. This would include mandatory training and qualification requirements for credit union board members and key employees.
Another proposal submitted for consultation is that credit unions disclose more information in the report to their members at annual general meetings, to the Registry and in their financial statements.
The government is inviting credit co-operatives, their members and the public to share their views on the proposed changes by emailing mccy_regcoop@mccy.gov.sg. The consultation will end on 2 February.
