House approves regulations governing agricultural loan societies four years after Act passed

Four years after the Agricultural Loan Societies and Approved Organisations Act was passed, the House of Representatives yesterday gave the nod to regulations that will make the Act operational.

The Act is aimed at streamlining the process of the dissolution of the board, and subsuming its inspection and monitoring functions, in relation to the management of agricultural loan societies, to the Registrar of Cooperative Societies.

To facilitate this, 31 positions of the Agricultural Credit Board (ACB) were transferred to the Department of Co-operative Societies.

“This means that the department really reports to the Ministry of Industry, Investment and Commerce,” portfolio minister, Audley Shaw, advised the House.

It also provides for the establishment of the Agricultural Appeal Tribunal, the registration and regulation of the agricultural loan societies, and the certification of approved organisations by, or under the Registrar of Cooperative Societies and related matters, and several mechanisms to combat money laundering.

Agricultural loan societies  the main one being the National People’s Co-operative Bank (NPCB or PC Bank)  and other approved loan organisations regulated by the Act are set up to offer loans and give support to their members for agricultural activities.

In October 2017, Parliament passed the Agricultural Loan Societies and Approved Organisations Act, almost two years after the ACB came under harsh scrutiny in the wake of alarming findings of a special audit by the auditor general into the operations of the PC Bank across the island.

Legal and disciplinary actions were taken against several people in relation to hundreds of millions of members’ deposits, but no charges were laid against anyone at the time.

The ACB took over management of the PC Bank following the release of the audit report in which Auditor General Pamela Monroe Ellis said her team had found no explanation for the use of the deposits  totalling $665 million  belonging to more than 200,000 members of the bank. The audit also pointed to glaring abuse of position by the management of the farmers’ bank.

Yesterday, Minister Shaw said the PC Bank remains in operation with assets of some $3 billion.

Under the regulations to the Act, agricultural loan societies and the approved organisations will amend their rules, subject to the approval of the registrar; stipulate that all loans are to be classified as approved by the registrar in accordance with the law; and make it their duty to keep written and up-to-date records of books and documents, and submit annual reports and returns to the registrar.

The agricultural loan societies must also prepare a monthly statement and submit to the committee of management of the society, as well as supply its secretary, or any other officer authorised to receive monies, with an approved receipt book and follow standard accounting procedures.

The regulations also empower the registrar to examine books, securities records, and all cash in hand of agricultural loan societies. Furthermore, societies and approved organisations are obligated to lodge all funds to a bank approved by the registrar in the name of the organisation and must also make provisions for the safe keeping of cash, securities, documents, and other properties.

The loan society must also immediately inform the registrar of any changes to its chairmanship, treasurer, secretary, manager, or any other person who is approved to sign cheques. All loan societies must provide a financial statement to its members annually.