The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Clearing Bank Association’s (CBA) chairman is not sure Bahamians will be able to take advantage of the new relaxed lending policies handed down by the Central Bank.

Kenrick Brathwaite, managing director of the Bank of The Bahamas, told Tribune Business that despite the regulator meaning well in relaxing lending policies last week, “a very small percentage of borrowers in this country total debt service ration (TDSR) falls below 50 percent. So you are going to find that some people will rejoice and the banking industry will rejoice because we’ve always had to adhere to strict TDSR guidelines with the exception of consolidations, but I’m not sure how many borrowers will be jumping for joy this morning to say that this is relaxed”.

The Central Bank also changed the equity requirements for loans as well, but Mr Brathwaite said this “is not something a customer would be jumping up for joy for, because I’m not sure how many places would be impacted”.

He added: “But this is a good thing for the central bank to recognise that a lot Bahamians have lending or borrowing needs and if somehow if you can assist them, even if only a few, you’ve done something good.”

The Central Bank said effective immediately, lending institutions may, on a case-by-case basis, approve applications for new personal loans, subject to the total debt service ratio for the facility and any pre-existing obligations not exceeding 50 percent. That is, unless stipulated regulatory requirements have been imposed by the Central Bank on specific banks or credit unions. This increases the total debt service ratio from the current range of 40 percent to 45 percent.

Easing credit in a time where inflation is high and Bahamians are importing it into the country would appear as a financial stimulus, but not necessarily a response to the US Federal Reserve raising interest rates last month.

But Mr Brathwaite ultimately warned that not many people would benefit from the new relaxation of lending restrictions from the central bank. “The truth is a high percentage of the employment force is already overly burdened with debt and that’s why I said TDSR’s are above 50 percent and most of them have probably exceeded 50 percent.”