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Supermarkets, hardware stores could offer banking services

Published:Thursday | November 3, 2016 | 11:00 AMJovan Johnson
Shaw

Regulations have been approved that will give some banks the power to appoint agents such as supermarkets or hardware stores to carry out some banking services.

The approval by the House of Representatives on Wednesday came in a debate that saw parliamentarians renewing calls for tighter regulations of banking fees.

Some of the services that the agents would be able to do include deposits and withdrawals, payments of bills and loan repayment, electronic transfer of funds and account balance enquiries.

Finance Minister Audley Shaw said the Banking Services (Deposit Taking Institutions) (Agent Banking) regulations will increase access to banking services. "This will facilitate the Government's commitment to financial inclusion, that is getting banking services and access to money, making it more accessible to our citizens."

He added that the new system would help to bring more Jamaicans out of the informal economy by cutting waiting times, among other things.

Shaw acknowledged that "widening of the channels of delivery of banking services, to include non-banking agents, creates an increased risk to the financial sector which has to be met with adequate regulation of this area. As such, the Agent Banking Regulations seek to prescribe the application process, eligibility requirements, responsibilities, obligations and other applicable considerations that will be applicable to agent banking operations".

Under the regulations, the agents cannot charge fees for the services, grant loans, open bank accounts or use customers' funds for purposes other than requested by the customer.

In meeting the requirements to get an agent appointed, the deposit-taking institution has to, among other things, provide information about the proposed agent's nature of business, years in operation, financial performance, including profitability and audited statements.

 

A REGULATORY SYSTEM

 

The agent, once appointed, must physically separate the banking operations from its main commercial activity.

The Bank of Jamaica (BoJ), which will be the supervisor, will have power to enforce the regulations and revoke appointments, among other things.

Opposition spokesman on finance Dr Peter Phillips said he supported the regulations. However, he said the Parliament needs to foster more inclusion by implementing tighter regulations over how banks charge customers for depositing or withdrawing.

He argued that the fees have become punitive and prohibitive.

St Catherine Southern MP Fitz Jackson has tabled a private members' bill that proposes the establishment of a regulatory system to govern how banks charge fees.

Shaw said the Bank of Jamaica is developing a code of conduct that would govern the actions of banks.

The Agent Banking Regulations will fall under the Banking Services Act that was passed in 2014. The law amended and consolidated the then Banking Act, Financial Institutions Act and the prudential regulation provisions of the Building Societies Act into one governing act.

The law also enhanced the powers of the BoJ as chief police of the financial system.

jovan.johnson@gleanerjm.com