Experts propose establishment of a cooperative deposit insurance agency

Jakarta (ANTARA) - A number of experts have proposed the establishment of a cooperative deposit insurance agency (LPSK) within the Cooperatives Bill to provide protection for members’ savings, especially in savings and loan cooperatives (KSP). During a meeting with the House of Representatives’ Commission VI in Jakarta on Tuesday, Professor Euis Amalia of UIN Syarif Hidayatullah Jakarta assessed that cooperative members’ savings currently lack protection equivalent to that of the banking sector, which is guaranteed by the Indonesia Deposit Insurance Corporation (LPS). She noted that many savings in cooperatives, derived from the hard work of micro, small, and medium enterprise (MSME) actors, have no guarantee if the cooperative defaults or goes bankrupt. ‘The proposed article is the establishment of a cooperative deposit insurance agency that organises the guarantee of member savings in KSPs and sharia savings and loan cooperatives (KSPPS),’ Euis said during the meeting, which gathered input for the Cooperatives Bill. She added that cooperatives collecting member savings must become participants in the insurance programme, with funding sourced from participant contributions and initial capital separated according to regulations. Furthermore, the LPSK is proposed to have the authority to resolve failing participating cooperatives in coordination with the cooperative supervisory authority. ‘The LPSK needs to be independent and accountable to the President, as well as coordinate with the existing LPS,’ she said. Euis also proposed the formation of an independent cooperative supervisory authority (OPK), similar to the Financial Services Authority (OJK) which oversees the financial services sector. She argued that cooperative supervision has so far relied on internal mechanisms, making it less accountable and effective, particularly for savings and loan cooperatives. She assessed that the presence of an OPK is crucial to strengthen cooperative governance and supervision, including licensing, regulation, supervision, and the imposition of sanctions on savings and loan cooperatives serving members (closed loop). Meanwhile, she explained that cooperatives with an open loop scheme, which can collect funds or extend financing to non-members, should be under the coordinated supervision of the OPK and OJK in accordance with the Financial Sector Development and Strengthening Law (P2SK). On the same occasion, cooperative expert Agung Sudjatmoko from Bina Nusantara University assessed that a cooperative deposit insurance agency is important to strengthen member protection, increase public trust, and prevent the risk of savings and loan cooperative failures that could harm the public. He explained that the regulation of the cooperative deposit insurance agency must be clearly stipulated in the law, including its institutional form, funding sources, insurance scheme, claim mechanism, and supervisory governance. In addition, he said the regulation must anticipate the potential for moral hazard in the management of savings and loan cooperatives to prevent misuse by irresponsible managers.