KINGSTON, Jamaica–It isn’t just the United States where credit unions are arguing the increasing regulatory load is forcing CUs out of business.
Audley Shaw, a spokesperson for the opposition on finance and planning, told the Ministry of Finance and the Bank of Jamaica (BOJ) that oppressive regulations are driving credit union contraction.
According to the Jamaica Observer, since 2012 the government has promised a new regulatory framework under the BOJ for the operations of local credit unions that will address issues such as whether the credit unions will be allowed to have more than 10% of their loans unsecured, and the minimum level of capital to start a credit union.
Shaw urged the government to understand that making the regulations too oppressive could destroy the unique principle of savings and low cost loans at credit unions. Shaw’s comments came during a luncheon hosted by the Jamaica Co-operative Credit Union League (JCCUL) and the Jamaica Association of Co-operative Credit Union Managers at the Jamaica Pegasus, New Kingston.
Shaw also called on the credit unions to urgently expand membership and lend more money for small business loans.
"In a recent World Bank study, Jamaica was ranked 99 out of 112 countries with interest rate spreads of 12%, while in the most developed countries interest rate spreads are between 2% and 3% in the Caribbean region an average of 6%," Shaw was quoted by the Jamaica Observer as saying.