Some deposit-taking financial services companies in Barbados have received a tongue-lashing from Governor of the Central Bank Dr DeLisle Worrell.
Speaking during a recent meeting of the Barbados Association of Insurance and Financial Advisors (BARAIFA) at the Lloyd Erskine Sandiford Centre, Worrell said individuals and retirees were not getting what they deserved on deposits.
According to the Governor, households and individuals were “well served” by banks, credit unions and finance companies in the provision of financing for housing, durable consumption goods and amenities.
However, the Central Bank boss was not as complimentary about other services.
Below inflation rate
“Individuals and households are not as well served when it comes to alternatives for investing their savings,”?he said. “Commercial banks offer poor returns on deposits, invariably below the rate of inflation; the purchasing power of monies left on deposit at a bank is eroded over time.”
He added: “The financial system does not serve the needs of retirees very well because pensions are not adjusted in line with inflation in the typical domestic scheme.
In less than a decade after retirement the average pensioner is unable to maintain his or her standard of living purely because of the ravages of inflation, unless they have supplementary income.”
Worrell also said that “innovators” often complained that commercial banks were reluctant to lend to them, but advised that owners of new companies should avoid bank debt if possible.
Worrell pointed out that the further development of the Barbados economy required increasing investment in activities that were innovative. He suggested investment in green energy, tourism, international business and finance, and agro-processing.
“Examples include facilities for sports such as polo and rallying, heritage sites, [and] production of biodiesel. For these and similar activities we need to find the appropriate financial channels to overcome the perceived difficulties in securing adequate funding for their implementation,” he said. (MM)