THE EDITOR, Sir:
Daily, there are complaints of the high cost of services provided by commercial banks and the huge spread between deposit rates and loan rates in Jamaica. This is because of lack of competition in the banking sector.
To solve this problem, the Government must grant two new commercial banking licences to locals with the following stipulations:
1. No group, company, families or individuals may own more than five per cent of the paid-up capital of the bank, as this would avoid undue influence on management or directors of the bank. This would also give more Jamaicans a chance to share in the profit of the bank that would remain in Jamaica and not be shipped abroad.
2. The Government must have two appointments to the board of directors. This will not give them control, but through these directors the Government will be kept informed on what is happening to the bank.
With the new banking regulations, it is almost impossible for a bank to repeat the banking disaster that led to FINSAC.
I am confident that this competition will force down rates and reduce the monopolistic tendencies of the current banks.
Cross Roads PO