- The Ministry of Agriculture has stabilised affairs at the National People’s Cooperative Bank (NPCB), with the Agriculture Credit Board (ACB) taking over the management and control of the bank.
- The move is to address financial and managerial irregularities at the bank, coming out of an audit, which found breaches of the standard operating procedures, particularly as they relate to credit policies.
- The independent audit was carried out on August 5.
The Ministry of Agriculture has stabilised affairs at the National People’s Cooperative Bank (NPCB), with the Agriculture Credit Board (ACB) taking over the management and control of the bank.
The move is to address financial and managerial irregularities at the bank, coming out of an audit, which found breaches of the standard operating procedures, particularly as they relate to credit policies. The independent audit was carried out on August 5.
Portfolio Minister, Hon. Derrick Kellier, said today (Sept. 18), that the ACB installed an interim general manager, with effect from August 27.
He was addressing a press briefing convened at the Ministry’s head office at Hope Gardens, St. Andrew.
The Minister said coming out of the audit, there has been an immediate suspension of loans to the directors of the NPCB.
He also pointed out that a rescheduling of loans to directors became subject to the approval of the ACB and a loan ceiling of $15 million was instituted in the case where the source of financing is NPCB members’ deposits. Loan requests exceeding that figure is to be referred to the ACB for approval.
A new period of delinquency, not exceeding 90 days, has also been adopted. This is down from 180 days.
“Jamaica can be assured that our proactive actions have served to cauterise the situation and we will not relax our regulatory muscle nor abandon the process until all has been settled,” Minister Kellier said.
He said the Ministry and the regulators of the PC Bank are dissatisfied with the quality of governance, the poor management practices, the low level of compliance with regulations and the quality of loans.
“We are satisfied, however, that the PC Bank is not in breach of the loans to savings ratio, which now stands at 53 per cent,” he said.
As it relates to the way forward, Minister Kellier said he has charged the ACB “to work collaboratively with the Development Bank of Jamaica (DBJ) and the Registrar of Cooperatives to furnish me with appropriate recommendations.”
Chairman of the ACB, Hugh Graham, informed that a team has been strengthened to collect outstanding funds from former directors, who inappropriately took loans and are in arrears.
“We recognise that although the institution is 110 years old, there are some systemic, fundamental problems with the model and we are seeking to address that so that we will not have a repeat of this situation,” he noted.
Minister Kellier thanked the over 200,000 farmers, who subscribe to the PC Bank for their loyalty. He noted that for the first six months of this year, savings grew by 11.4 per cent, outpacing all other financial institutions in terms of deposits.
Mr. Kellier sought to clarify that the PC Bank is a private entity and that the Government has no representation on its board. He said the Ministry’s relationship with the bank is by virtue of the ACB Act, which gives the credit board responsibility to regulate the cooperative.
Meanwhile, Managing Director of DBJ, Mr. Milverton Reynolds expressed satisfaction with the steps taken by the Ministry and the ACB to address the irregularities.
“For us at the DBJ, the PC Bank remains a very important institution, and we are therefore committed to ensuring that it becomes a viable financial institution,” he said.
Minister Kellier will be making a report to Cabinet on the findings of the audit, as well as the proposed restructuring and strengthening of the financial management of the bank.