Safety net for credit unions
Sat, 04/09/2016 - 12:00am
Barbados is closer to having a Deposit Insurance Scheme in place for the credit union sector.
Word of this has come from Chief Executive Officer of the Financial Services Commission (FSC), Randy Graham. He told the media that there is a proposed action plan in place to effect the necessary legislative changes required to establish such a facility, which will provide protection for credit union members, as is the case with persons who have savings in the commercial banks.
He made the comments following a press conference yesterday morning at the Commission’s office, during which he noted that to date the Ministry of Finance and the Chief Parliamentary Counsel have been conducting preliminary reviews of the documentation, while his office and the Central Bank have been examining the funding requirements that would be necessary.
Graham indicated that while the intention was to have such a scheme in place within the first quarter of this year, and they have made significant headway, there are still some outstanding issues that need to be sorted through before the Chief Parliamentary Counsel can start drafting the relevant legislation. The FSC head said that if all goes well, they expect the deposit insurance facility to be available within the second half of the year.
“We are just making sure that when the final legislation is prepared it fits the credit union movement and it takes into consideration the characteristics of the Barbados credit union movement; and that’s why we are taking some time to get it right. But I have every confidence that every stakeholder will support this and we will have it in place sometime during 2016,” he added.
The FSC’s boss explained that the facility is aimed at providing a layer of protection for every member that has an account with the credit union, so that if the credit union runs into financial challenges, deposits that are being held for members are protected up to a certain quantity. Graham’s comments came as he indicated that the stakeholders in the sector are keen on the initiative, having been pushing for it for some time now. With that in mind, he said every effort is being made to ensure it can be achieved in the shortest possible time.
The CEO added, “The banks have a similar thing in place right now, it protects every account holder up to $20,000, so that if the bank runs into trouble and they don’t have the funds, that the deposit insurance would provide up to $20,000 to protect the savings of each Barbadian. That is the exact thing we are trying to replicate for the credit union.”
Meanwhile, he revealed that credit unions’ assets have risen to $1.8 billion. He said the credit unions have recorded approximately six to seven percent year-on-year growth in respect of their assets base, adding that such growth is typical for these financial entities. Graham further indicated that membership within the credit unions are within the range of 130,000 to 140,000, with Barbados having one of the highest concentrations of credit union members per capita. (JRT)