North Korea’s central bank conducted a two-week audit of the Commercial Bank of South Hwanghae province beginning Sept. 1. The audit focused primarily on the bank’s card business and other financial services. It aimed to assess the successes and challenges of the provincial bank cards and develop strategies to address the identified issues.
According to a source in the country recently, “Central bank auditors found that the number of new bank cards issued by the provincial commercial bank had increased by 15% over the same period last year, and that provincial residents were making more cashless purchases.” However, the auditors also noted that the use of the electronic payment system was limited by network problems in certain counties in the province, which “created public distrust in the banking system.”
The central bank concluded from the audit that it needed to expand the network and address technical issues to address the disparity between different regions of the province.
A secondary focus for the central bank was in the areas of savings and consumer finance.
“The commercial bank audit found that the savings rate of the province’s residents was stable overall. However, there was little savings in areas based on fishing and agriculture, where there are large seasonal fluctuations in income for structural reasons,” the source said.
“Another problem identified was that while loan applications from private shops and restaurants increased by 8% in the third quarter compared to the first quarter, the loan repayment rate was low. The central bank has instructed the commercial bank to address such issues by diversifying its loans and financial products,” he added.
Rural financial inclusion: A blueprint for national reform
Restoring the financial function and supporting the circulation of currency in the province were also major issues in the central bank’s audit.
“Auditors reported that while the provincial commercial bank is maintaining a stable level of currency circulation, the level of financial access in rural parts of South Hwanghae province remains very low. The central bank is considering expanding financial services in rural areas to address this, and is also examining ways to increase the efficiency of foreign exchange policy with the provincial commercial bank,” the source said.
The high productivity of farms and fisheries in South Hwanghae province makes it very important on a national level. As such, some in North Korea believe the government wants to improve the financial sector as a whole to encourage more residents of the province to use banking services.
“The reason why the central bank conducted this overall review of programs at the provincial commercial bank was to strengthen the financial function to facilitate the economic activities of the provincial residents and thus stimulate the regional economy. The central bank intends to use South Hwanghae province as a model to promote the development of the country’s overall financial sector,” the source said.
The Daily NK works with a network of sources in North Korea, China, and elsewhere. For security reasons, their identities remain anonymous.
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