The Malaysia Co-operative Societies Commission and Bank Negara Malaysia will set out the operational and assessment framework when considering an application by a co-operative society to take deposits from the public, other than its own members.
Deputy Minister of Domestic Trade, Co-operatives and Consumerism Datuk Paduka Ahmad Bashah Md Hanipah said the framework would ensure that co-operative societies that undertake deposit taking activity are financially sound.
He said the framework aims to ensure that co-operative societies have robust governance and risk management systems in place, especially to manage liquidity and credit risks effectively.
"This is necessary to safeguard the interests of depositors," he said at a Press conference in Kuala Lumpur today.
Under the Financial Services Act 2013 and Islamic Financial Services Act 2013, a co-operative society is required to obtain approval from Bank Negara and the commission if it wants to undertake a deposit taking activity from the public.
The operational and assessment framework is covered in a memorandum of understanding (MoU) signed between the commission and the central bank today.
The MoU highlights the intent of Bank Negara and the commission to cooperate and share information in areas of common interest for the effective discharge of each other's mandates.
The MoU encompasses cooperation in the exchange of information, formulation of legislation and policies, financial inclusion initiatives, capacity building and technical cooperation as well as cooperative arrangements for financial stability.
Bank Negara said in a statement said the collaborative arrangement will facilitate greater cooperation between the central bank and the commission in advancing the country's financial inclusion agenda.
"This would contribute towards fostering the sound and orderly development of the co-operative society sector and enhancing its contribution to national development and economic growth," it said. - Bernama, July 30, 2013.