The adherence of Credit Unions to international regulatory and supervisory best practices is considered critical to their operations, the Minister of Lands and Local Government the Hon. Sidney Collie said.
Against this backdrop, Minister Collie applauded the Department of Cooperative Development’s efforts in organising a workshop designed to build capacity and strengthen the credit union system in the country. The Department falls under the Ministry of Lands and Local Government
“Credit Union management must be prudent in adhering to general guidelines of regulator and industry in meeting and maintaining statutory requirements,” the Minister said during Monday’s opening of the five-day PEARLS Monitoring System workshop.
“Three keys to effective management include operational objectives such as transparency, accountability and governance.”
Mr. Collie noted that the future of cooperatives will be determined by an assessment of achievements to date; analysis of current constraints; appreciation of the changing socio-economic and political environment and new development in the industry in response to changes in the wider financial industry.
He said the Cooperative Societies Act, 2005 and pending Cooperative Regulations will raise the standards for Credit Union operations, requiring higher performance standards.
The new Cooperative Regulations will also provide the Department of Cooperative Development with strengthened monitoring, inspection and enforcement capabilities.
He said, “Now more than ever before there is a need for relevant sectoral training to propel the sector forward; thus allowing for Cooperatives and Credit Unions to remain relevant and in compliance with laws and industry standards.”
To achieve the legislative goal of compliance, Mr. Collie explained that it is critical that all Cooperatives and Credit Unions be re-evaluated in relation to new laws and regulatory policies.
“Measuring the financial strength of Credit Unions requires the testing of various performance standards,” he said.
“Key performance indicators include: net worth ratios, return on assets ratios, loan delinquency ratios, liquidity ratios, loan loss to assets ratios and operating expense ratios just to name a few.”
Referring to the training workshop, he said the PEARLS Monitoring System is an excellent management tool for Credit Union to provide relevant and on-time data.
“In turn the Department as a regulatory agency can assess and encourage preventive measures in a timely manner,” Mr. Collie said. “The Cooperative Sector should embrace the PEARLS Monitoring System as a measuring tool, so that standards are fair and just for all Credit Unions and cooperatives in the Sector.”
He told the participants that the workshop should enhance their understanding of the rationale for analysis and use of ratios.
“This workshop should also provide you with a greater appreciation for the key functions of the PEARLS system; as well as use it as a reporting tool for generating vital reports on liquidity, delinquencies and strategic business planning.”
The workshop is being facilitated by Ralph Wharton, Development Consultant to the Caribbean Confederation of Credit Unions. Topics to be discussed include: Credit Union Corporate Governance; PEARLS Software Overview and Data Input; PEARLS Reports Interpretation and PEARLS Application and Business Planning.