Commercial banks might have to insure deposits; no place for “dirty money”

Last Updated on Sunday, 22 November 2015, 2:34 by GxMedia

Commercial banks in Guyana could soon be asked to insure deposits to help savers recover their monies should those financial institutions collapse, President David Granger announced Saturday.

“Our government proposes to discuss with bankers the implementation of a deposit insurance scheme to ensure that individuals who hold deposits at failed financial institutions would be compensated up to an agreed amount within a specific time,” he said.

The President was at the time addressing the formal opening of Demerara Bank’s Corporate Headquarters and corporate bank on Camp Street. The new building was constructed over the past 17 months at a cost of GYD$800 million

The Guyanese leader’s disclosure comes against the background of thousands of Guyanese depositors losing millions of dollars due to the collapse of Globe Trust in 2001, Colonial Life Insurance (CLICO) six years ago and the then Antigua-based Stanford Bank.

The collapse of those institutions, he said, signaled the need for “continued vigilance” and the need to strengthen the regulatory and supervisory capacity of the Bank of Guyana.

“Dirty money”

President Granger also used the opportunity to call on banks to ensure they do not transact business involving “dirty money,” against the background of money laundering causing economic evident economic distortions. He cautioned that Guyana could be exposed to sanctions if money laundering undermines Guyana’s financial system.

“We look forward to the vision of our commercial banks and of our regulatory bodies to prevent the contamination of our financial system with dirty money,” he said.

He  called on commercial banks to “zealously guard against illicit funds finding their way into the financial system. He remarked that his administration remained committed to ensuring that Guyana remains compliant with the Financial Action Task Force (FATF).

Security

On the thorny issue of crime, the President said his administration was doing everything possible to stem crime by reviving the United Kingdom-funded Security Sector Reform Programme (SSRP) that had been ditched by the then People’s Progressive Party Civic-led administration.

“This administration has got to deal with a police force that has not been reformed. We will deal with it and I ask you to be patient with us but we are changing, we are transforming the police force,” he said.

He called on banks to do their part by developing other monetary instruments because Guyana was still a largely cash-based economy. He lamented that gold mining areas like Mabaruma and Mahdia have no banks. “People must still walk around with their money in black plastic bags,” he said.

Granger said he told British Prime Minister, David Cameron on the margins of the United Nations General Assembly held last September in New York that he wanted the 3.5 million British pounds sterling package.

Demerara Bank’s Chief Executive Officer, Pravinchandra Dave told attendees that the new location would ensure tighter security for its corporate customers who are 80 percent of the institution’s customers.

Demerara Bank was granted a commercial bank license and the financial institution opened its doors for business in 1994 at South Road and Camp Street, Georgetown.

Today, the bank has seven locations.