JCCUL pushback against BOJ gets a hearing in Parliament
Published:Sunday | July 10, 2011 | 12:00 AM
The Jamaica Cooperative Credit Union League (JCCUL) has presented its position on pending Bank of Jamaica (BOJ) regulations to be imposed on the sector to the Economy and Production Committee of Parliament seeking a redraft of at least five of the proposed oversight rules.
The credit union has been lobbying the central bank for amendments before the regulations are fully legislated, but has got no traction.
Earlier this year, the movement shifted its lobby to the political directorate, leading to an audience before the parliamentary committee.
"We discussed the five issues on which there has been no resolution," JCCUL general manager Glenworth Francis said last week.
The parliamentary committee will now go on to review the BOJ's position by seeking input from the central bank.
"The committee indicated that they will seek audience with the BOJ to be apprised of their views on the issues, and that they will respond to the movement thereafter," said Francis.
The five points of disagreement between the state regulator and the community-based lenders include the capital requirements to start a credit union; the claim on dormant funds by the Ministry of Finance; a proposed 10 per cent portfolio limit on unsecured loans; the time limit on the period in which adequate capitalisation can be achieved; and the amount of cash reserves to be lodged at the central bank.
The JCCUL amplified its objections as the central bank moved to have draft regulations placed before Parliament for passage into law.
The credit unions have called for more dialogue, saying the new rules are likely to contract business.
The sector comprises 43 credit unions after a series of mergers ahead of the new and tighter regulatory regime.
A meeting of the umbrella JCCUL in April mandated the agency to secure concessions from the BOJ and minister of finance.
The community lenders are most opposed to the 10 per cent credit limit on unsecured loans, noting that poorer Jamaicans, who comprise a great portion of their client base, do not have collateral in the form that large lenders require.
The movement also objects to the policy for unclaimed monies from inactive accounts, which existing law already specifies would be taken over by Government after 15 years of dormancy, saying it could potentially give the Government call on up to 10 per cent of credit union savings estimated by the JCCUL to be sitting in idle accounts.
Based on the J$47.63 billion value placed on credit union savings at December 2010, the Government could seize J$4.76 billion once the new regulations are passed into law.