Forty-two microlenders now approved

OF THE more than 100 microlenders who have applied for certification by the Bank of Jamaica (BOJ), 42 are now approved, according to data from the central bank.

This is an increase over the 27 approvals disclosed in December 2023.

The BOJ, the new regulatory authority for the sector under the Microcredit Act (2021), introduced its oversight in a bid to reduce the possibility of money laundering and consumer-hostile practices, such as loan sharking.

In December, the BOJ disclosed that it was in receipt of 143 applications as at the end of November 2023, which altogether reflect an aggregated loan balance of J$45.8 billion (approximately two per cent of GDP).

TRANSITION PERIOD

For those which are not yet approved, the BOJ has provided regulatory forbearance letters that allow operators who applied before the end of the transition period (July 30, 2022) to continue operating until a decision is made to grant, or not to grant, a licence.

The BOJ indicated that in assessing applications, it identified information gaps which must be addressed in order for a decision to be taken.

Material deficiencies identified include information on the ownership of applicants, sources of funding and sources of wealth, and governance arrangements required for compliance with the laws of the country.

The Microcredit Act indicates that the Consumer Affairs Commission has been appointed to investigate complaints brought to it by borrowers from microlenders.

Denisher Forbes, CEO of E-Loan Micro Financing Limited, the sole microlender in St James which has been approved to date, told Wednesday Business that she will now be able to reopen bank accounts which were closed because she was not accredited.

“This is a big deal. We are the only accredited company in St James,” she stated.

Accredited companies are also able to lend to civil servants, and gain access to a list of government-approved lenders issued by the Ministry of Finance and the Public Service, and a wider spectrum of companies which allow salary deductions for loan repayment.

Forbes stated: “No longer will we hear from some of the largest financial institutions in the country, ‘I am sorry Ms Forbes, we don’t do business with companies like yours’, and in other dire cases, ‘I am sorry, but our bank will have to close down your business account’, given that there is no regulation for microlenders in Jamaica.

“These and many more injustices, discrimination, prejudice and crippling situations were i mposed against our business over the past 10 years. In the year 2017, one of the largest financial institutions went as far as closing out our business account of eight years with their institution, citing ‘no regulations’, which cost us approximately four million in damages, loss of customers, market share, and almost forcing us into bankruptcy,” she pointed out.

“Fortuitously, on February 2, 2024, we overcame when we received the microcredit licence from the BOJ, after applying from July 2022.”