Finance Minister Christopher Sinckler has promised the local credit union movement that all the legislative and administrative requirements necessary for the implementation of deposit insurance for credit union members will be in place by next year.
Deposit insurance is a measure to protect depositors in full or in part from losses and failures caused by financial institutions.
Speaking yesterday at the opening of the latest branch of the Barbados Workers??? Union Credit Union Limited at Southern Plaza, Oistins, Christ Church, Mr. Sinckler noted that the World Council of Credit Unions had recommended in its 2010 report that credit unions should establish deposit insurance funds to offer first line protection to credit union members in the same manner as was widely utilised in the commercial banking sector.
He explained that in Barbados, such cover was accorded commercial bank depositors through the Deposit Insurance Act, where a limit of $25, 000 was guaranteed through an annual premium payment of 0.05 per cent of their insurable deposits to the Barbados Deposit Insurance Corporation.
???This measure provides a legislated security mechanism that not only protects the depositor from total loss but insulates to some degree the authorities from the potential of large payouts from state funds at the expense of other taxpayers,??? he stated.
Mr. Sinckler said that it was recommended that the Deposit Insurance Act be modified and that there should be financial standards for entering into deposit insurance. It was further recommended that credit unions should establish a target equity ratio of two percent for the Deposit Insurance Fund.
The Finance Minister noted that the Chief Executive Officer of the Financial Services Commission had indicated that emphasis would be placed on getting the deposit insurance scheme functioning, and also on expanding the products offered by the credit unions to allow their income streams to be diversified.
???I want today to publicly associate myself with these assertions from the CEO, and to further state that it is the intention of this Government to ensure that all of the necessary legislative and administrative requirements to make this proposition a reality be put in place by the end of the second quarter of 2016 at the latest,??? he declared.