"The bank already has (relevant institutions), the LPS (Indonesian Deposit Insurance Corporation) for deposit insurance, and OJK (Financial Services Authority) for oversight functions. Meanwhile, cooperatives have no such agency," Masduki stated at the State Palace complex here, Wednesday.
The minister proposed the inclusion of three new aspects in the revision of Law No. 25 of 1992 on Cooperatives, with the first proposal being the establishment of a cooperatives oversight agency.
"Medium- and large-scale savings and loan cooperatives must have an oversight agency, similar to OJK (in the banking sector), but specialized for cooperatives. The United States and Japan already have such agencies," he emphasized.
Masduki highlighted the urgency of an oversight agency for cooperatives to protect cooperatives' members, as larger cooperatives handle a large number of financial transactions, yet the current Cooperatives Law is inadequate.
"I have informed the president and the coordinating minister of economic affairs on the proposed revision to the Cooperatives Law to prevent financial criminals in the banking sector to move to cooperatives (to abuse) the weakly-regulated savings and loan cooperatives," the minister expounded.
The second proposal in the Cooperatives Law revision is to regulate the establishment of a deposit insurance agency similar to LPS in the banking sector.
"It will be unfair that while deposit in banks is insured, savings and loan cooperatives are not accorded the same protection. This is important," he stressed.
The minister said that the third proposal on the revision is to establish a mechanism allowing cooperatives to cooperate on the matter of liquidity provision.
"For instance, a bank can simply borrow (from other banks) to cover liquidity deficiencies. The cooperative sector also needs this mechanism," Masduki explained.
The government will also push the parliament to include the revision to the Cooperatives Law into this year's National Legislation Programme, he said.
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Translator: Indra Arief P, Nabil Ihsan
Editor: Azis Kurmala
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