Banks told: Don't take benefits to repay loans

Central Bank of the Bahamas.

Central Bank of the Bahamas.

The Central Bank yesterday said it has ordered commercial banks and credit unions not to use clients' COVID-19 unemployment benefits to repay loan facilities.

The regulator, in a statement issued yesterday, said it had told financial institutions to communicate with clients on "the processes" that will be used to reimburse customers whose benefit payments were taken to service outstanding credit facilities. It added that it "did not endorse" its licensees redirecting customers' benefit payments without their knowledge or permission.

The Central Bank said it had taken action because increasing numbers of recipients were avoiding direct deposits to their accounts to safeguard their unemployment benefits from lenders, which was "not in the interest of an orderly payments system".

"The Central Bank has taken note of public concerns that unemployment benefits and equivalent government assistance payments for COVID-19 relief might involuntarily be applied to loan payments when sent directly to deposit accounts," the regulator said. "Moreover, the bank is aware that recipients might be electing less efficient payment options to avert this suspected practice.

"The Central Bank does not endorse the involuntary redirection of unemployment benefits or other government-funded assistance payments. Given the volume of such payments and public health/safety concerns around processes by which these are being converted to cash, avoidance of direct deposits is not in the interest of the orderly functioning of the domestic payments system nor the domestic banking system."

The Central Bank added that it has "therefore requested that commercial banks and credit unions maintain adequate systems to preserve COVID-19 income replacement proceeds for their intended social safety net use".

"Financial institutions have also been requested to communicate with their clients, through accessible public channels, on the processes that have been established for recipients to recover proceeds that were involuntarily applied to other purposes," it continued.

"Recipients of unemployment benefits and assistance are urged to have payments sent directly to their deposit accounts, and to request correct guidance from their financial institutions on how to specify their account numbers."

The National Insurance Board (NIB), meanwhile, yesterday disclosed that the Government-funded self-employed benefit programme it previously administered had now closed after some 7,183 claimants received a collective $15.5m.

The national social security system said its own unemployment benefits initiative had paid-out $84.2m to 36,813 claimants since the COVID-19 crisis began in mid-March 2020. However, Dr Nicola Virgill-Rolle, NIB's director, lamented in a statement that it had seen "far too many returned" benefits payments because recipients either failed to provide bank details or gave incorrect information.

Noting that NIB has moved away from a previously-manual process, where jobless Bahamians first had to register with the Department of Labour and obtain the B81 labour card to qualify for benefits, she said: "Recognising the realities of COVID-19, NIB changed its process to allow for direct deposit payments and payments through employers.

"However, some claimants did not provide banking information or their banking information was incorrect, and so cheques had to be prepared. We were seeing far too many returned payments which then needed to be reissued to customers."


tribanon 2 years ago

This is like telling people not to leave money in their bank accounts where the bank can get at it to repay loans and advances they owe the bank. The Central Bank no longer seems to be concerned about the financial well being of the licensees that it supervises. Just as the Minnis led government no longer seems concerned about the health and well being of the vast majority of Bahamians as evidenced by its no notice draconian yo-yo lockdowns. Kinda makes you want to cry.


bogart 2 years ago

Good point. Plus curious situation with Dr. Nicola Virgill-Rolle, NIB mandated by job to instruct sending out funds, govt intention to benefit recipients, to recipients legally authorized designated bank accounts .......and husband, Mr. John Rolle Govenor of Central Bank, Central Bank, powers of Regulator, Bank Supervisor, Inspector intervening into banks at same time and situation telling banks to relinquish bank contractual arrangement whichinin is Contract between Customer and Bank. Conflict.


ohdrap4 2 years ago

The bank programs automatic deductions for the duration of the loans. Not sure those can be easily suspended.


trueBahamian 2 years ago

The Central Bank speaks, wow! With everything going on, this is the major item to speak about. Really? This is a sidebar conversation with the banks and a move on. A side article at best.

We need the Central Bank to speak to the economic situation we're in. We need them tackle the big ticket items that they're there to address. This subject here is like the police arresting a kid for stealing potato chips while helping a serial killer escape.


bogart 2 years ago

The Authority ought to know that the Customer and the Bank has a Contractual arrangement. The Customer has the voice to arrange with the Bank.

However, 2018 the Central Bank 'acquired' some $108.8 million dollars belonging to some 41,459 to 42,452 customers bank accounts because these customers cannot be found and notified.....( likely most customers on 7 x 21 mile island) even though the Central Bank mandated as Central Bank Supervisor an Regulator, Inspector of Banks have customers provide realms of identification papers, NIB govt Card, Govt Passport, Govt birth certificate an plenty more papers....to find people an give them back their money then. Soooooooooo now same Central bank can take plenty of plenty people money....an local banks cant...even though rules right to set off, appropriation .

Each Bank, under market condition, Contract between themselves an customer, has their own rights on how to deal wid each and erry customer and not "told" by Central Bank Regulator. Central Bank ought to know that banks have Private investors, shareholders as owners and do not operate like Govt bank with number of population owners and private shareholders and still not revealling Canadian Martelly report and forensic investications. In a not too long ago situation wid protesters protesting on road on bank charging hurtful $16. Bank fee same Central Bank did nothing an told all market forces prevailing.


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