NBS to fall under Bank of Guyana umbrella
Stabroek News
April 30, 2004
The Bank of Guyana is to implement arrangements for the supervision of the New Building Society based on amendments to be made to the Financial Institutions Act (FIA).
This intention was announced in the recent draft Poverty Reduction Strategy progress report. Director of Bank Supervision Department in the Bank of Guyana, Ramnarine Lall says the revision of the FIA and the Bank of Guyana Act would allow for the levelling of the playing field to have NBS fall under the Bank's supervisory oversight.
It is not clear as of now, whether NBS would need to be licensed as a deposit taking institution under the new FIA requirements but the Central Bank would be empowered to conduct on-site inspections and apply consolidated supervision of all financial institutions.
NBS is not licensed by the Central Bank, and has not been subjected to routine supervision. However, the Minister of Finance, Saisnarine Kowlessar, recently ordered the Bank of Guyana to inspect its books under Section 19 of the NBS Act. But chartered accountant and shareholder, Christopher Ram questions the legality of this order in a letter in today's Stabroek News.
Section 19 of the NBS Act says the minister, if he thinks fit, "on the application of not less than one-tenth of the whole number of members of the society or of one hundred members, whichever is less" can order an inspection.
However, Director/Secretary of NBS Maurice Arjoon in a letter in Stabroek News last Friday wrote that the minister's order was a result of numerous calls by some members, including Ram, for such an inspection. Ram in his reply asks Arjoon to provide the evidence. The Act requires evidence of good reasons for an inspection to ensure that malicious motives are not at hand.
Repeated efforts in the past two weeks to reach Kowlessar on whether his order to the Bank of Guyana was legal were unsuccessful. The Bank of Guyana conducted a routine inspection of NBS.