The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

REVIEWS of draft Bills that will create a Credit Bureau and bring Bahamian credit unions under the regulatory supervision of the Central Bank of the Bahamas will both be complete “in the coming months”, the latter’s Governor told Tribune Business.

Describing the Credit Bureau as “progressing well”, Wendy Craigg said the International Finance Corporation (IFC) consultant who is working with the Central Bank on the project was recently in the Bahamas to assess the work done by various industry groups on the legislation and operational framework.

“We now have in hand a draft Credit Reporting Bill, which the [Central] Bank is reviewing and anticipates being able to issue for public consultation in the coming months,” Mrs Craigg said.

“An important part of the exercise will be the selection of the service provider and, of course, the commencement of the consumer education campaign, prior to the launch of the reporting agency.

“The exercise is not a simple one, but we are working diligently to ensure that all aspects of concerns are given appropriate attention.”

A credit bureau would, in theory, allow Bahamian commercial banks and all other lenders to access data on every individual and corporate borrower in this nation.

It would enable them to assess the creditworthiness of all loan applicants prior to taking any decision on whether to approve credit, examining the level of their existing obligations and track record with other lending institutions.

Currently, Bahamas-based lenders have no way of tracking, let alone catching, individuals who bounce from one lending institution to another, leaving a trail of unpaid debts behind.

And, privately, several Bahamian commercial bankers have admitted to Tribune Business that so-called ‘sub-prime’ lending is “alive and well” in this nation, with numerous individuals receiving credit who should not do so.

A contributory factor to this is exchange controls, which restrict Bahamas-based lenders to this nation when it comes to seeking returns on their excess liquidity. But, apart from increasing transparency and efficiency in the credit process, a credit bureau could potentially enable creditworthy borrowers to receive a lower interest rate on their loans.

Elsewhere, the Central Bank governor said the regulator was continuing to move forward on an initiative to take over supervision of Bahamian credit unions.

She told Tribune Business: “The Bank is continuing to work with the Department of Cooperatives and the credit union stakeholders on the transition project.

“We are presently having closed consultations on a draft Credit Union Bill, which will form the basis for the supervision and regulation of these entities under the Central Bank.

“This is an important phase of our dialogue, and we want to ensure that the draft, while based on international best practices, is also reflective and sensitive to the status of the sector here in the Bahamas. We are aiming to complete this process within the coming months.”

In the period up to 2011, Bahamian credit unions outpaced commercial banks through an average total asset growth rate of 9.25 per cent over five years, their collective membership having increased by 29 per cent over the same period to account for one-fifth of this nation’s workforce.

The reforms are also designed to tackle issues such as deposit insurance and corporate governance. Total credit union assets stood at $250.1 million at end-December 2010