Press Releases

BCCULL President's Message: Deposit Insurance

Big movement on deposit insurance for credit unions

For more than a decade, the Barbados Co-operative & Credit Union League Limited (BCCULL) has led a vigorous lobby to ensure the island’s more than 220,000 credit union members are provided with the same protection as clients of other licensed deposit-taking financial institutions in Barbados.

The BCCULL, the umbrella body/trade association for credit unions, is pleased to report that our sector is now another step closer to achieving our goal of inclusion in the national deposit insurance financial safety net, currently managed by the Barbados Deposit Insurance Corporation (BDIC).

The BDIC is a statutory corporation established in 2006 under the Deposit Insurance Act. It commenced operations in 2007 and provides protection for customers’ savings in commercial banks, deposit-taking trust and finance companies, in the event of an institutional failure.

The island’s six commercial banks, along with four non-bank deposit-taking financial institutions are BDIC fund members. This status ensures the savings of each of their depositors are covered up to a maximum of $25,000.

Why have credit unions insisted on inclusion? The credit union movement has been built on the backs of working class Barbadians who have developed enormous strength over the years through solidarity and cooperation.

Credit unions represent a critical component of the island’s overall financial infrastructure with members collectively holding almost $3 billion in deposits.

The BCCULL leadership over the years has insisted that our members must be afforded equal protection. Put simply, the savings of credit union members also matter.

The credit union sector is highly regulated by the Financial Services Commission (FSC), with enhanced oversight by the Central Bank of Barbados for credit unions deemed Systemically Important Financial Institutions (SIFIs).

What further strengthens the case for credit unions’ inclusion in the national deposit insurance financial safety net is the fact that some credit unions in Barbados hold more deposits than some financial institutions that are members of the BDIC.

Within recent weeks, Prime Minister and Minister of Finance the Honourable Mia Amor Mottley has followed through on a commitment from her 2022 Budgetary Proposals to make deposit insurance a reality for credit union members.

A major cross-regulatory meeting was held earlier this month and the Ministry of Finance has authorised the BDIC to put the necessary measures in place to make deposit insurance a reality for credit unions.
In the meantime, timelines are being addressed for the necessary legislative amendments and the establishment of minimum standards for entry.

The BCCULL is aware that the process for entry into the BDIC will likely require some institutional adjustments and minimum sectoral standards. In preparation for that process, we have been engaging international consultant Dave Grace, the senior partner of Dave Grace & Associates, to provide guidance.

Grace is one of the world’s foremost thought leaders, working with the International Monetary Fund and the World Bank on the subject. He will be in Barbados from August 28 to 31 for critical meetings with credit unions, Government and regulatory officials, from which we expect the path will be clearer for this long-awaited development.

 

  

 

 

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Barbados Co-operative & Credit Union League Ltd.
1st Floor, Patrick E. McDonald Building
Upper Collymore Rock, St. Michael, Barbados

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