‘Credit union sector remains very stable’
In spite of the economic challenges continuing to face the country, the local credit union sector remains very stable at this time.
So says Chief Executive Officer of the Financial Services Commission (FSC), Kester Guy. He made the comments during a recently held media briefing, as he said that the credit union movement continues to provide a significant financial service to the Barbadian population.
“A very large cross-section of the Barbadian population is involved in the credit union movement and we have observed the credit unions continuing to provide loans to individuals, continuing to provide deposit savings accounts, well accounts for which there are interest bearing accounts to their stakeholders... Holistically, the movement is moving in the right direction and is in good order,” he told reporters.
This stability is good news for the sector, which just recently became a member of the Social Partnership, joining, Government, Labour and the business community at the negotiating table. Guy said that the credit union movement remains stable even though it has been experiencing some challenges with its non-performing loans portfolio. In that vein, he said the FSC is keeping a watchful eye on the sector as it relates to such risks.
“We monitor them in terms of the level of risks and so on that are being undertaken. We have seen with the general economic cycle, some upward movement in their non-performing loans where it becomes difficult for persons to meet their obligations, but broadly speaking the sector is managing those risks well and are making the necessary provisions in terms of capital, so that these risks do not turn into any major vulnerabilities that would compromise the sector,” the FSC head stated.
Asked about the repeated calls for deposit insurance protection to be extended to the credit union sector, so as to allow the 200 000 strong membership to have some security against loss as a result of any possible failure, as is the case with banks, Guy said the FSC was aware of the calls, but explained that it did not fall directly within its purview.
“Deposit insurance is a separate pillar from the FSC, so there is a Deposit Insurance Corporation for instance and there are many other bank room things that must be put in place such as the appropriate legislation and so on for that; and the Government’s stance on that, which I won’t speak to, is also critical in the overarching decision,” he said.
Guy continued, “What the FSC as the regulator will often play a key role in, is in providing information as to what is the state of the entities, what are the key financial indicators we would look at in those entities and make sure that those are available for all the relevant stakeholders in their decision making process. And so it is not a matter exclusively related to the FSC, for the FSC to make a determination on as it relates to deposit insurance or banking.”
Guy was also questioned about the impact on the movement, regarding the imminent changes to the CarIFS network. The Caribbean Integrated Financial Services Inc., (CarIFS), is the network that allows financial institutions in the banking and credit union sectors to have 24/7 access to their accounts via point-of-sale terminals and automatic banking machines. Guy said that significant work is being done as it relates to that integrated payment system and he expects that the concern will soon be a “conversation of history”, indicating that the discussions are at an advanced stage.
“All the stakeholders, including government officials are aware of some of the new or modern payment systems being adopted by banks and it is just for ensuring the integrated payment systems within credit unions, banks and other forms of payments, Fare easily accessible across the financial space and so there is significant work in that regard,” he stated. (JRT)