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ECCU credit bureau expected to boost lending


ECCU credit bureau expected to boost lending

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BASSETERRE — In an effort to improve citizens’ access to loans from financial institutions, the Eastern Caribbean Central Bank (ECCB) is in the process of developing a credit bureau for the eight-member Eastern Caribbean Currency Union (ECCU). 

The establishment of a credit bureau for the ECCU is expected to improve access to financing for micro, small and medium-sized enterprises, which make up the lifeblood of our economies. 

A credit bureau is an effective mechanism for credit risk management because it collects and shares information on how individuals and businesses manage their credit from lending institutions. 

A credit bureau therefore improves the lending process by enabling better and faster decision-making based on detailed credit profiles.  The availability of a full credit history for borrowers therefore improves their access to credit while discouraging discriminatory lending practices and reducing default rates.

As at December 2015, the non-performing loan (NPL) ratio at financial institutions in the ECCU was 17.03 per cent, with those in St Kitts and Nevis having a slightly better NPL ratio of 15.93 per cent. 

The credit reporting system is being organised in collaboration with the International Finance Corporation (IFC), a member of the World Bank Group, and is coming at a much-needed time. 

That’s because the ECCB Governor Timothy Antoine, presented a report during the 87th Meeting of the Monetary Council of the Eastern Caribbean Central Bank, which indicated that banking sector credit to the private sector, including businesses and households continued to fall last year in the Eastern Caribbean Currency Union. 

The 87th Meeting was held at the Bank’s Headquarters in Basseterre, St Kitts last Thursday.

The Communiqué issued following the meeting said the credit reporting system, which is in the works, is “expected to assist in the reduction in lending rates.”

It further stated that, “Credit reporting legislation is necessary to promote the growth and development of the ECCU Credit Reporting System and the development and operationalisation of a credit bureau within the single financial and economic space.”

The Communiqué continued: “The ECCB has engaged relevant stakeholders across the ECCU including: the Chambers of Commerce, Attorneys General, Ministries of Finance, financial sector regulators and potential participants in the credit bureau including banks, nonbank financial institutions, telecommunication companies, utilities companies and hire purchase retailers, to craft the Harmonised Credit Reporting Bill and Regulations.”

It also said that, “The Council approved the proposed Credit Reporting Bill and Regulations and agreed to urge member governments to ensure the Credit Reporting Bill and Regulations are in force by September 2017.”

The Monetary Council is the highest decision-making authority of the Eastern Caribbean Central Bank. 

It comprises eight Ministers of Finance, one from each member government. Prime Minister Dr Timothy Harris is the Minister of Finance in St Kitts and Nevis. 

Prime Minister of Antigua and Barbuda Gaston Browne assumed the one-year chairmanship of the Monetary Council during its 85th Meeting held in Antigua last year.  (PR)