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Govt to issue new bill to protect cooperative members from fraud
Several changes, from the establishment of OJK and LPS-like bodies to criminal sanctions would be added to the revised cooperative law.
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Cooperatives and SMEs Minister Teten Masduki speaks to guests at the ministry office in Central Jakarta in this file photo taken on Aug. 29, 2022. (Courtesy of Cooperatives and SMEs Ministry/-)
T
he government is preparing a new bill that will introduce a set of new rules to protect members of saving-lending cooperatives, including by forming a set of watchdogs to safeguard the industry against future fraud.
The new rule will come in the form of a revision to the 1992 Cooperatives Law; the government plans to start deliberating the bill with the House of Representatives this year.
Cooperatives and Small and Medium Enterprises (SMEs) Minister Teten Masduki said on Wednesday, as quoted from Bisnis.com, the revision would provide a basis for the establishment of a new supervision body for cooperatives that would be similar to Financial Services Authority (OJK), albeit for cooperatives involved in saving and lending.
The bill will also include deposit insurance firms and apex institutions that could lend some money for cooperatives to maintain their liquidity, on par with the function of Deposit Insurance Agency (LPS) and the central bank in the conventional banking system.
Read also: Who should supervise savings and loans cooperatives in Indonesia?
Ahmad Zabadi, the ministry’s undersecretary on cooperatives, told CNBC Indonesia on Thursday that the bill would also include a stability committee to monitor and maintain cooperatives' financial health as well as criminal sanctions for those convicted of fraud.
The move came as a response to an alleged fraud case involving savings and loans cooperative KSP Indosurya, that allegedly embezzled Rp 106 trillion (US$6.97 billion) of customers' funds, making it possibly one of the largest frauds in the country’s history.
