Banks getting away with outrageous fees as regulator doing nothing

I recall, sometime last year, the former Minister of Finance had reason to complain that commercial banks had restricted banking hours while raising their fees for using their ATM machines. So, the banks restrict customers from using their buildings to conduct transactions, driving them to ATM machines, and then seize the opportunity to maximize their incomes/profits by increasing ATM usage fees. In fact, ATM machines are deployed by banks to reduce its employee costs (it’s part of automation, the more one interacts with a machine, the less one does with a person), but here in Guyana, unlike other countries, the banks are allowed to charge for its use. It’s what one would expect from a monopoly/oligopoly system and why they should be properly regulated.

But the abuse by the banks is not limited to ATM machines. Another automation/technology feature subject to such exploitation is the emerging online electronic money transfers. This allows customers, from the safety of their homes and offices, to move funds from one bank account to another. Again, the technology provides a cost saving to the bank but be warned - use it only if you’re willing to pay a minimum of $1,000 per transaction. Yes, a transfer of $1,000 will result in the attachment of a $1,000 bank fee. Banks get away with this abuse because Central Bank’s regulation is nonexistent in Guyana. Commercial banks are allowed to run helter-skelter over their customers aided by a system which restricts the offering of financial services by others thus ensuring continued exploitation. So commercial banks in Guyana, abetted by the regulators, charge usurious interest rates on loans which are three times that of the US; attach fees to every service imaginable – ask them to certify an account balance and be willing to pay $4,000; apply enormous charges for blank paper cheques – a free good at most US banks; and maintain large interest margins – the difference between the interest it pays depositors and what it charges on loans using the same depositors’ funds. I’m even aware of a foreign sale of US$26 which when paid by bank transfer, the bank deducted its fee of US$25 and gave the recipient US$1.

As I’ve heard complaints about the country’s financial system from many in the diaspora interested in investing here, it is obvious that development is severely retarded when financial services come at a high price. It is the regulators who have allowed the situation to get out of control and they need to get their act together. Proper regulation requires that every charge by the bank be cost justified. This cannot be the current case as banks are charging for use of technology which results in cost savings to them. Unless properly regulated, development would just be an unattainable dream.