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Minister of Industry, Investment and Commerce, Hon. Karl Samuda, has called on the banking sector to take a more holistic approach in facilitating borrowers to be more successful in repaying their loans.
“There is the practice in the banking community where if you owe money to a lending institution, to go to another to secure a loan to consolidate all your debts. There is a reluctance by the banks to do that. They will not allow you to borrow enough to remove your indebtedness to other institutions and thereby give you an opportunity to make a success of the loan that you’re seeking,” Mr. Samuda said.
The Minister said that it was this all-inclusive approach that was lacking in the banking system, which lent itself to a myopic view that spoke only to the interest of individual banking institutions.
Mr. Samuda was addressing the House of Representatives in Kingston on February 9, during a debate on the Credit Reporting Bill.
“Until the banks begin to respect that principle of consolidation, of capitalising on debt in such a way that the borrower will have an easier passage over a longer period, it will always be an impediment to business, both fledgling and developed businesses that have gotten themselves into some difficulty,” the Minister argued.
The House passed the Bill, which allows for the sharing of credit information between specified financial institutions and enables creditors to make better lending decisions. It also provides for the licensing and supervision of a Credit Bureau, and other connected matters.
The legislation will enable creditors to better manage risk and improve pricing of loans, once information is accurate and complete. Other benefits include the management of the information by the Credit Bureau, which will facilitate the improvement of credit risk management by financial institutions.