BOJ working with March deadline for credit union reform
The Bank of Jamaica, BOJ, agreed to a new bill for the credit union sector after legislative drafters of regulations to police the group highlighted prospective clashes with current law, but is holding to an early 2018 timeline to wrap up the reforms.
Initially, the central bank had intended to police the movement under the Bank of Jamaica Act, and after 18 years of negotiations, had sent the regulations off for drafting by the Parliamentary Counsel.
It recently scuttled that approach "based on concerns raised during the drafting process," said BOJ Division Chief Dr Jide Lewis, who will head the supervisory unit for credit unions. His comment confirms an initial report from the Jamaica Co-operative Credit Union League, JCCUL, that two decades in, the authorities had chosen to take a new direction in the reform programme that is meant to transition the movement from self-regulation to central bank supervision.
Lewis says policymakers finally agreed that certain elements of the reform were best dealt with by "primary statute", as they were outside the scope of Section 34 of the BOJ Act, under which credit unions would have been bundled.
It was likely to conflict with the Co-operatives Societies Act, which itself is in the process of being amended.
"While the legislation could have proceeded using the regulations route, further adjustments would have been necessary to the proposed Cooperative Societies (Amendment) Bill and the resulting legislation would have been unwieldy with the bulk of the prudential regime residing in regulations," Lewis told Gleaner Business.
The change of strategy vindicates JCCUL's two-decade-old position that writing regulations for the $100 billion credit union sector under the BOJ Act could lead to conflict with the law governing co-operatives, a class in which credit unions fall.
JCCUL General Manager Glenworth Francis says they expect the credit union bill to pass through Parliament by year end, and the transition to BOJ oversight to happen by next March. That's nine months beyond the last anticipated, and missed, deadline of June 2017.
Asked whether the current process was likely to result in more delays, Lewis was optimistic about the March deadline.
"The substance of the proposals for the bill will remain essentially the same and therefore the view is that this change of approach should not unduly impact the timeline," he said.
The credit union sector, comprising around 34 community banks, have custody of some $78 billion of savings for nearly one million Jamaicans. The change in regulatory oversight will bring savers under the protective umbrella of the Jamaica Deposit Insurance Corporation.