Suruj Happy with government and banks taking his advice
I am happy to see the government and banks taking the advice put forward by me to make it easier for small businesses to access funding.
Last week in parliament I suggested banks should be prepared to give up 25 percent of their profits in the form of interest rate reductions and deferrals without penalties, especially banks in which the government has substantial holdings. While government could not compel banks to do such, I am happy that the Minister of finance announced that First Citizens Bank will be offering soft loans to small businesses and that government will be covering interest costs for a period of four (4) years with a deferral of principal payments.
The Minister should also inform the public as to whether the banks have passed on benefits that have occurred as a result of changes by the Central Bank. Several small businesses have already been forced to close while others have already start informing workers that they will not be taking them back due to the “lockdown” brought about by COVID-19, and others are on the verge of shutting down. The need to keep small businesses afloat is imperative given that this sector along with self-employed account for at least 300,000 jobs.
The current situation is not normal and the burden of adjustment must be shared. This includes the banks. While the Bankers Association have come out in stout defence of their position citing public ownership and responsibility to shareholders, I stand firm in my initial statement when I said that banks are being unkind to citizens. As I stated previously, banks must remember that successful businesses and people are the cause of their high profitability. If people fail to be prosperous and if businesses fail, banks and their shareholders will also suffer.
People are also beginning to have problems paying their residential mortgages. The government must consider the creation of a fund at 1 to 2 percent to assist persons with mortgage payments. This might mean borrowing at low interest rates on the international market and through its existing mortgage institutions assist persons whose mortgages are in jeopardy of being called in by the private sector banks. People have realized that deferrals of their loans mean additional interest and having to extend the life of their loans. In reality the people are not going to benefit from the central bank measures they have introduced.
I have not taken up this fight to ridicule the banks, but to show that more could be done to help the most vulnerable in society given the current circumstances.
Dr. Surujrattan RambachanShare on Facebook