In order to improve the operational quality and safety of the people’ credit funds, over the past time, the State Bank of Vietnam (SBV) has promulgated several regimes and policies, as well as conducted various measures to improve the operations, enhance the inspection and supervision over the people’s credit funds, with special emphasis on the role of internal supervision and audit.
On November 4, 2022, the SBV organized a Workshop themed “Improving the legal frameworks for internal supervision and audit at the people’s credit funds” under the chairmanship of SBV First Deputy Governor Dao Minh Tu.
The Workshop provided an insight into the current situation of the internal supervision and audit at the people’s credit funds, possible solutions for the revision and improvement of the legal frameworks for internal supervision and audit at the people’s credit funds, thereby contributing to the restructuring of these funds.
Improving the role of the internal supervision and audit at the people’s credit funds
In his opening speech at the Workshop, Mr. Tran Dang Phi, Deputy Chief Inspector of the Banking Inspection and Supervision Agency, said that since the establishment in 1993, the people’s credit funds have constantly increased in sizes and contributed significantly to the socio-economic development.
As of September 30, 2022, there were 1,179 people’s credit funds nationwide with the total asset of VND 166.7 trillion, accounting for 1% of the total asset of the system of credit institutions. The operations of the people’s credit funds have helped to improve the living conditions of their members, and made important contributions to the poverty reduction in the agriculture and rural areas.
Mr. Tran Dang Phi, Deputy Chief Inspector of the Banking Inspection and Supervision Agency, speaks at the Workshop
However, apart from positive results, there are also a number of people’s credit funds that have violated the laws and operated with potential risks, affecting depositors’ rights as well as the entire society.
In order to improve the operational quality and safety of the system of people’s credit funds, the SBV has issued a number of regimes and policies, and conducted various measures to improve the operations, enhance the inspection and supervision over the people’s credit funds, with special emphasis on the role of internal supervision and audit.
Sharing at the Workshop, Mr. Nguyen Quoc Cuong, Chairman of the Board of Directors of the Cooperative Bank cum President of the Association of People’s Credit Funds, said that the sustainable development of an institution requires three factors, i.e. smooth financial liquidity, high quality human resources, and an effective management and supervision system.
He added that it was necessary to establish an effective internal supervision and audit system for risk management and improvement of the occupational code of ethics, as well as the operational safety of the people’s credit funds. This is one of the most important tasks in the process of restructuring the system of people’s credit funds.
Exchanging about the difficulties in the implementation of the relevant regulations on internal supervision and audit at the people’s credit funds present in Son La province, Mr. Trinh Cong Van, Director of the SBV – Son La branch, shared that the operational scope, the financial capacity and the human resources at the people’s credit funds have been very limited compared with those at the commercial banks. Therefore, it is difficult for the system of internal supervision and audit at the people’s credit funds to fully meet the requirements and objectives as expected.
An overview of the Workshop
The experts at the Workshop also shared their views on other relevant topics such as the orientations for the amendments of the current regulations on the internal supervision and audit system at the people’s credit funds; the gaps between the current regulations on the internal supervision and audit system at the people’s credit funds and the international best practices; the recommendations from the perspective of theoretical researchers; the current state of internal supervision and audit affecting the safe and sound operations of the people’s credit funds; some suggestions and possible solutions; etc.
Continuing to ensure safe and sound operations of the people’s credit funds
Towards the end of the Workshop, Deputy Governor Dao Minh Tu emphasized the importance of the internal supervision and audit at the people’s credit funds. He requested to enhance and improve the role of internal supervision and audit at each people’s credit fund in order to minimize the risks and ensure the compliance with the applicable laws.
Participants at the Workshop
Moreover, the SBV Deputy Governor also requested the full cooperation from the relevant agencies to improve the human resource quality for the internal supervision and audit. He also mentioned the need to enhance the assessment of the performance of the internal supervision and audit in the coming time in order to get a clearer view of the current internal supervision and audit functions at the people’s credit funds.
In addition, the SBV Deputy Governor also stated that the on-site internal supervision and audit not only helps the management boards of the people’s credit funds in their daily management, but also helps the Banking Inspection and Supervision Agency to have more information and facilitate the supervision over the people’s credit funds.
The SBV Deputy Governor also emphasized the requirement for further studies on appropriate regimes and a well-functioning internal supervision and audit system at each people’s credit fund as one of the tools for more effective supervision of the operations of the people’s credit funds.
Le Hang