Tuesday, August 6, 2013

I HAVE THIS EERIE FEELING "MORR" WILL BE CIRCULARIZED THIS YEAR






Remember the "infamous" Memorandum of Rules and Regulations (MORR) which the Cooperative Development Authority through the instigation of people from the Department of Finance was able to have approved by then Pres. Gloria Macapagal Arroyo?

This was prior to the enactment of RA 9520, which mandates strict prudential rules and regulations for savings and credit cooperatives (even RA 9520 has no such thing as "credit and savings cooperative" classification, I think).

CDA SAID MORR
WILL BE CIRCULARIZED
 

Early in 2013, I remember CDA Chairman Emmanuel M. Santiaguel, Ph.D. reporting that the "circularization" of the MORR is being studied by the Legal Department of CDA, for possible issuance and implementation.

I said I have have this eerie feeling that the MORR is being resurrected from the dead and soon will be foisted upon deposit-taking and loan-granting credit cooperatives.

MORR UP IN CDA-
LCDOP CONFAB
 

Why did I feel/fear this way?  This was when I saw the MORR  as among the topics ("Transforming MORR into Directives:  A Concern on Coop Regulation and Good Governance"), to be taken up during a coming cooperative conference.

This is during the 6th National Tripartite Conference for Cooperative Development scheduled on October 9-10, 2013 at Garden Orchid Hotel, Zamboanga City.

Held every two years, this will be conducted by the League of Cooperative Development Officers of the Philippines (LCDOP), in partnership with the CDA, and the government of Zamboanga City.

I believe CDA Chairman Santiaguel was once a chairman or head of LCDOP, prior to his being appointed to CDA.
  
THE CONFERENCE:
WHAT IS IT FOR?
 

In the its announcement, the conference "serves as a venue for presentation and discussion of pertinent issues and concerns benefitting the cooperatives..".

Furthermore, it says that "it also aims to harmonize the relationship between CDA and the local government units in the implementation of cooperative policies, formulation and passage of propositions that will address the clamor and interest of the key players in the pursuit of cooperative sustainability and empowerment."

APPLY MORR ONLY TO
"FINANCIAL SERVICE CO-OPS"
 

Personally, they can adopt the MORR, for all I care.  But please, limit its implementation to "financial service cooperatives" and spare the credit cooperatives/multipurpose cooperatives with savings and lending operations.

As prudential rules, the MORR has these financial service cooperatives in mind, which under RA 9520 must be accredited also by the Bangko Sentral ng Pilipinas.  This is because, they are the cooperatives that best resemble banks,  also under the BSP supervision.

CAN CREDIT CO-OPS
SURVIVE MORR?
 

I fear that credit cooperatives/multipurpose cooperatives cannot survive "killer" provisions of the MORR, among which is the strict provisioning for probable loan losses.  

If the MORR would cover these credit cooperatives, I don't believe they can long survive the MORR.  This, I believe, would be a case where the remedy was worse than the disease, as it were.

NOT LIKE
BANKS


Unlike in banks where the costumers are mostly savers, members of credit cooperatives/multipurpose cooperatives are mostly borrowers and whatever savings they have are also serve as "loan multipliers" and collateral to their loans with the cooperative.

In short, majority of members of credit cooperatives/multipurpose cooperatives have more money taken out as loans than their savings/share capital/deposits combined.  So, the risk is more against the cooperative than the members.

So there.  What do you think?  (END).

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