Senate Approves Policies for Microcredit Institutions

The Senate on Friday (July 23) approved the regulations and rules associated with the Microcredit Act.

They are the Microcredit Fees Regulations, the Microcredit Requirements for Grant of Licence Regulations and the Microcredit Licence Form of Applications rules.

The Microcredit Act was passed in the House of Representatives on January 19 and in the Senate on January 22.

Piloting the regulations, Minister Without Portfolio in the Ministry of National Security, Senator the Hon. Matthew Samuda, said it is necessary that the suite of regulations and rules be promulgated for the Act to become effective and for the Bank of Jamaica to start the licensing and supervision of the sector.

He said the deadline for affirmation of the rules and regulations is the end of July, based on commitment with the Financial Action Task Force.

Senator Samuda said microcredit institutions play an important role in facilitating the provision of credit to individuals and micro, small and medium-sized enterprises.

“As such, in order to improve the monitoring of the industry, promote greater transparency, protection of consumers and reduction in risks of the industry being used as a vehicle to facilitate money laundering, it is critical that the Act become effective and operational.

“In order for the commencement of oversight of the microcredit institutions, it is necessary that this suite of regulations and rules be affirmed in both Houses,” he said.

In supporting the regulations, Leader of Opposition Business in the Senate, Senator Peter Bunting, said the Regulations aim to [put] in the administrative support to operationalise that Act.

“The trend of increasing oversight, regulation, transparency, and through that discouraging money laundering, terrorism financing and other illicit activities is global and is something that is good for us. We know when it comes to microcredit institutions, sometimes you are speaking about very small operations and, therefore, …you have to try and balance,” he said.

The Microcredit Act 2021 aims to license and regulate microcredit institutions. The legislation seeks to, among other things, discourage microcredit institutions from lending money at excessive interest rates that are not justified by the risk; outlaw predatory lending practices, threats and intimidation; promote greater transparency and disclosure of pricing and terms of products and reduce the risk of the industry being used to facilitate money laundering.