The Regulation of Deposit-taking Cooperatives
The focus of this paper is on the role that Cooperative Development Authority (CDA) needs to play in order to protect the interests of the investors who put their money in Deposit-Taking Cooperatives (DTC). The author provides statistics to show the extent of growth in the cooperative sector in Philippines and the challenges arising therefrom for CDA.
The author considers that two different and inconsistent roles of development, and registry and regulation of DTCs have been assigned to CDA. This has led to CDA's developmental focus on providing:
- Management and training programs for cooperatives;
- Financial assistance through grants, donation and subsidized loans.
CDA has limited its regulatory function to registration of cooperatives, federations and unions. No attention has been paid to:
- Cancellation of registration of those cooperatives that do not file their annual or audit report;
- The monitoring of financial health of DTCs that mobilize savings from low and middle income classes.
Citing the Central Bank example, the author concludes that CDA may be able to discharge both the roles assigned to it, provided it delegates some part of its role of development to standard unions or large cooperatives, and focuses more on regulatory role for setting standards, imposing uniform accounting rules, requiring the submission of annual financial statements and audit reports.
