Islands in the Eastern Caribbean are experiencing sweeping banking reform. Citizens in the region now face declining credit, as banks are less willing to lend due to a high rate of non-performing loans.
Eastern Caribbean Central Bank officials say there are too many potentially good businesses struggling to secure working capital to survive. They have introduced a range of measures geared at ensuring banks lend to private citizens and small businesses on better terms.
For local businessperson, Everistus Jn Marie, it is welcome news, but he says citizens and businesses need to hold up to their end of the loan process.
”It's always a good idea if funds could be made more accessible to the average citizen in the region. This has been a major constraint in terms of our development as a region. So, yes, I think it is something to be encouraged, but at the same time it has to be done within a certain context. We must develop a culture within the region of being able to repay our debts,” he said.
The Eastern Caribbean Central Bank has stepped in to halt the closure of two banks in the region. The institution's governor says the new banking act will provide more protection.
”The council has agreed to the passage of a new banking act which provides for greater protection of depositors and increased regulation of banks in keeping with new international requirements. The legislation and other steps being proposed by the central bank and agreed to by the monetary council will give the legal capacity to successfully address the issues affecting the banking system and place us in a position to preempt future crises of this kind,” he said.
The total assets of banks in the Eastern Caribbean stand at EC$26.7 billion. Deposits amount to EC$19.7 billion and loans EC$13.6 billion.
Sir Dwight says given the importance of the banking system to the ECCU, its stability is of paramount importance.
The council’s new Banking Act seeks to provide increased regulation of banks, in keeping with new international banking requirements.
Banks will be required to hold higher levels of capital to make them more resilient, depositor insurance will be instituted to safeguard deposits up to EC$200,000 and new foreclosure laws will be drafted to ensure expeditious treatment on behalf of creditors and debtors.