Parliament has amended the banking law to make it possible for people who previously did not qualify for banking to open an account at a commercial bank in St. Vincent and the Grenadines.
The law was proposed by the Eastern Caribbean Central Bank (ECCB) for member countries of the Eastern Caribbean Currency Union (ECCU) and was passed with bipartisan support.
Minister of Finance Camillo Gonsalves noted that the changes in the law also govern banks’ relationships with the ECCB and their consumers.
He said the amendments also speak to the authorised actions of banks and the legislative and regulatory oversight that takes place over licensed financial institutions.
“From time to time, as the banking industry evolves, there is a need to update this particular piece of legislation to bring it in line with current realities, to anticipate future challenges and to correct whatever challenges may have come up along the way,” the finance minister told lawmakers.
He said member countries of the ECCU try to pass the law in as close to a harmonious way as possible and as close to in tandem as possible “to ensure that banking business operates within the Eastern Caribbean Currency Union under the same set of rules, regulations and oversight in one currency union member as in the next”.
Gonsalves said the amendments fall into four major areas, namely the modernisation of the scope of services offered by licensed financial institutions; strengthening the oversight powers for the ECCB over licensed financial institutions; the improvement of data protection, consumer protection and market conduct, supervision; and to deal with financial inclusion — for some vulnerable people to open a bank account.
He said that there are challenges for vulnerable people — who only have one form of identification, are unemployed or work in a low-wage job — to open a bank account.
The finance minister noted that before the amendment, people wanting to open a bank account had to present a job letter, two forms of ID, and “proof of this, proof of that. And it’s very difficult to open a bank account.
“This particular piece of legislation introduces the concept of something called a basic bank account,” Gonsalves said.
He said the elements of a basic bank account are that the account will be free to open.
“It will not attract any charges for deposits or withdrawals. It will accrue interest. It is not subject to a minimum balance but it may be subject to a maximum balance because this is a basic bank account and it does not have an associated checking or overdraft facility,” the finance minister said.
Gonsalves said it is a very simplified bank account, and “the understanding will be that this is somebody who is not likely to be a money launderer or a terrorist financier, or somebody who’s going to be doing a whole bunch of international transactions from their bank account.
“They want to deposit some money; they want to withdraw some money. They want the salary to go into the bank account. They want to take out some money. They want to write a cheque. They want to buy something,” the finance minister told lawmakers.
“So, this would be something that would have a top limit. You couldn’t put in more than x amount of dollars in the bank account. You wouldn’t be able to engage in multiple wire transfers overseas and that sort of thing. But at the same time, you will have simplified oversight, so there will be fewer regulations and fewer things that you have to bring to open the bank account.”
The finance minister said St. Vincent and the Grenadines is one of the most cash-dependent countries in the ECCU.
“And we know that the members of the Eastern Caribbean Currency Union, generally, across the board, have one of the higher levels of what they call the unbanked, which is people who don’t have any bank account at all.”
Gonsalves said there are a high number of people in SVG who are trying to get financial inclusion.
He said that with the amendment to the banking law, people can get a card and be able to purchase things at points of sale, use an ATM and get their salaries sent to their bank account.
“So, this is a very important amendment to facilitate financial inclusion of the poor and the vulnerable and people who do not meet the current very, very strict requirements to open a bank account,” Gonsalves said.
Meanwhile, opposition Leader Godwin Friday welcomed the amendments, telling Parliament that he believes that if the ECCB ensures that they are enforced, they “will go a long way to enabling more people to access financial services and to provide better protection for them as they do so”.
He said that before changes to the law, “it seems the consumer, everybody’s on their own, and you, basically, are at the mercy, almost, of the bank”.
The opposition leader pointed out that the amendments put additional responsibilities on banks “to avoid abusive practices, … for the bank to be more transparent, … to put the positive obligation on the bank to help with financial education, to help to put special measures on place for persons of low income and vulnerable persons and elderly persons to provide effective and better service”.
This must be another distraction by the longest serving prime minister in the area. I hope it benefits the people, somehow, at least but we know better, it is more of the same, keep the people poor and confused in order to get your way.
It’s been long overdue!