Yesterday, the National Assembly passed three Bills which will go a long way in strengthening the banking sector and give more powers to its chief regulator—The Central Bank.
As he contributed to the debate Finance Minister, Winston Jordan stressed that the three Bills—the National Payment System Bill 2018, Deposit Insurance Bill 2018, and the Insurance (Amendment) Bill—will bring Guyana’s banking sector on par with the rest of the Caribbean.
Jordan also explained that the Bills were as a result of the World Bank’s Financial Sector Assessment Program (FSAP). The program brings together the expertise of the World Bank and that of the International Monetary Fund (IMF) to help countries reduce the likelihood and severity of financial sector crises. He then explained the importance of each Bill to the House.
NATIONAL PAYMENT SYSTEM BILL
The Finance Minister said that this Bill seeks to introduce legislation for the establishment, regulation, and oversight of a National Payments System for Guyana and for matters connected therewith. He said that it provides for the establishment of the National Payments System Council and lays out the operational role of the Bank in relation to the National Payments System Council. The Bill also paves the way for the licensing of payment service providers and systems operators.
With this document, the Bank of Guyana is given the power to impose individual conditions for the operation of systems and the provision of services, ask for information, and agree with the individual operator or payments service provider on limitations in the activity or specific protective measures or impose sanctions and withdraw the relevant licence.
INSURANCE (AMENDMENT) BILL
Minister Jordan noted that this Bill inserts into the Insurance Act, clauses which address areas of contracts for long-term business, protection of policies, and paid up policies, surrender values, and non-forfeiture, respectively. The Bill among other things provides for the manner in which a person may serve a notice of cancellation on the insurer.
DEPOSIT INSURANCE BILL 2018
The Finance Minister said that this Bill seeks to establish a Deposit Insurance Scheme and to lay out a regime governing its core elements – the Deposit Insurance Corporation and the Deposit Insurance Fund. Given that deposit insurance is one of the components of the financial sector safety net, alongside supervision, resolution, and emergency liquidity assistance, Jordan said that this Bill seeks to address the inherent instability of maturity transformation in the banking sector. The Bill also notes that the advent of deposit insurance has proven to prevent major banking crises in the world over and plays a central role in maintaining financial stability.
