Central Bank formulating plan to increase banks’ confidence in lending
The Central Bank of The Bahamas (CBOB) is formulating a plan to increase commercial banks’ confidence in lending, CBOB Governor John Rolle said yesterday, adding that he finds bank lending could “stand to be larger” while still being prudent for the lending institutions.
Rolle said CBOB is also formulating a program to reduce the banking industry’s “aggregate non-performing loans”. He added that the Central Bank is establishing a Bahamian credit reporting bureau, and commencing a program to move more domestic transactions from cash to electronic methods in order to boost bank confidence in lending.
According to Rolle, banks have traditionally had too little information on borrowers, thus the need for the country’s first credit bureau.
However, Rolle said: “Bahamian bank lending could stand to be larger and still be prudent; that is, particularly, if we incentivize more lending of the right mix, to fund more counter-cyclical business and investment growth.
“In the process, the economy could also be sustainably larger and more prosperous. The transformation needed is to decrease the number of cents out each dollar of income earned that must be spent on imports.”
Rolle pointed to five conditions needed to support confidence in bank lending which included sufficient capital, sufficient liquidity, sufficient information about borrowers, a clear ability to collect on problem loans, and confidence in the general prospects for the economy.
“Bahamian banks at this point have plenty of capital and liquidity,” he said.
“What they lack is borrower information, and perhaps confidence in collecting problem loans, and/or confidence in the business prospects for The Bahamas.”
Rolle said as the Bahamian economy becomes more dependent on electronic transactions, commercial borrowers could have more success obtaining loans as their transactions will be easily documented and therefore their receipts and expenses looked at more credibly.
Education: Florida International University, BS in Journalism
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