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DBJ to lend J$1.5b through mobile banking platform

Published:Wednesday | February 13, 2013 | 12:00 AM
The Development Bank of Jamaica (DBJ) launched the M3 (Mobile Money for Microfinance) pilot project, at The Jamaica Pegasus hotel in New Kingston on Monday, February 11, 2013. Seen here are DBJ Managing Director Milverton Reynolds (left) and Transcel Limited Managing Director Hugo Daley. Transcel is DBJ's IT partner under the M3 project. - Winston Sill/Freelance Photographer

Correction & Clarification

The headline and content of the story titled 'DBJ to lend J$1.5b through mobile banking platform', incorrectly stated the funds available for the M3 pilot project. Development Bank of Jamaica said it will distribute J$450 million to microfinance institutions for lending next fiscal year and that MFIs participating in the M3 programme will determine how much is disbursed via the M3 platform. The J$1.5 billion relates to financing issued over several years to MFIs, since 2009.

We regret the error


The Development of Jamaica (DBJ) has launched a 'non-commercial' pilot of a new mobile money facility for microfinance loans, called M3, and has made J$1.55 billion available to 10 approved lenders for distribution in the test phase.

The project, which is being implemented in partnership with National Commercial Bank Jamaica (NCB) as the account holder for the micro-finance lenders and Transcel Limited as technology provider, was launched officially on Monday.

The maximum loan available individually will be US$5,000, with other limits to be set, said the DBJ. Lending under M3 begins in April.

The initiative is labelled 'non-commercial' because no fees are being charged by the DBJ and none will be required for use of ATM cards for withdrawal of funds once loans are approved.

M3 customers will be able to remotely access their NCB bank account, primarily to check account balances and to make bill payments, transfer funds; and carry out commercial activities such as person-to-business transactions and payments for goods and services.

The approved M3 lenders are: Access Financial Services Limited, First Heritage Cooperative Credit Union, NationGrowth Microfinance Limited, National People's Co-operative Bank, St Elizabeth Cooperative Credit Union, St Thomas Cooperative Credit Union, Jamaica National Small Business Limited, Micro Credit Limited, First Union Financial Limited and McKayla Financial Services Limited.


"We are actually starting lending in April. We are doing all the ground work now," said Emmy Lewars, general manager of institutional strengthening and project management at DBJ.

Lewars said collateral for loans was an issue to be addressed directly by the approved lenders, as well as the interest rate to be charged.

Hugo Daley, managing director of Trancel, said that the technology is expected to significantly reduce the cost of making loans and will get cheaper over time as "more people cooperate".

Trancel will supply the banking app to be deployed on borrowers' mobile phones. Daley indicated that the logistics were being worked out with mobile phone companies LIME Jamaica and Digicel Jamaica.

The cost of the pilot was not disclosed by the DBJ. Daley said that the mobile phones of borrowers do not have to be Internet-enabled must be able to support the M3 application. He said down-market phones, that is, the cheapest brands on the market, may not be compatible.

The M3 system will be implemented in four phases over a 12-month period and aims to capture more of the unbanked. It will require the opening of an account at NCB if the applicant is not yet an NCB customer.

Lewars said the DBJ was instructed by the Bank of Jamaica that NCB should be the responsible party for and AML-CFT (Know Your Customer and Anti-Money Laundering and Combating Financing of Terrorism) requirements under the banking project.

"M3 by design is 'bank-centric', which means that all the funds in the mobile money accounts must be held in a custodian account at NCB with the DBJ as trustee," said DBJ in press material distributed Monday.

Asked whether this meant NCB had veto power over the loan distribution, DBJ suggested that it did not.

"The individual applies for the loan from the MFI (microfinance institution) and remains the customer of the MFI. The MFI decides whether the customer will get the loan. NCB applies the KYC procedures & facilitates the new account," said DBJ spokeswoman Claudette White on Tuesday.

The findings of the pilot, DBJ Managing Director Milverton Reynolds, said at the launch, will be used as the basis for the development of policies covering the operation of all aspects of mobile money in Jamaica.