AMIDST raucous debate, the National Assembly last night saw the passage of the New Building Society (Amendment) Bill which, when assented to, will bring the institution, established in the 1940s, under the supervision of the Bank of Guyana, in accordance with the Financial Institutions Act of 1995. Speaking on the Bill, Finance Minister, Dr. Ashni Singh said that the legislation that he piloted represented yet another step in the modernization of the financial sector, a move that the government credits the steadfastness with which Guyana’s economy withstood the effects of the global economic and financial crisis.
He said the changes being made to the NBS in no way suggest that the entity was not managed in a sound manner. Rather, the Bill will see the NBS being subject to the standard regulations of the Bank of Guyana, thereby enhancing the strength of the institution.
Taking him up on the matter, PNCR-1G front-man, Winston Murray said that for some time now, there has been a call for the NBS to be brought under the Financial Institutions Act, and that while the PNCR supports the Bill in question, there is need for the legislation to be deferred so as to give members of the Society a chance to consider the amendments. Such a decision, it is felt, will entrench the Board of Directors of the NBS and not the shareholders.
Noting that the subject Minister has shown no evidence that he has consulted with the members of the Society before seeking to bring the amendments, Murray said what such a move will do is limit members’ ability to call a meeting of the Society, or for an inspection of the books of the institution.
He said that in the interest of transparency and good governance, the government had nothing to lose if it were to defer the Bill to allow members to deal with matters of interest to them. He also called for the Bill to be sent to a Special Select Committee.
And while he concurs with Minister Singh that Guyana’s financial system is strong and stable, and is something “that we must truly be mindful of,” he is of the opinion that as a financial institution now coming under the Financial Institutions Act, there should be a reserve requirement in place should there be a run on the entity, and shareholders and depositors need to get back their investments.
Noting that it would be wrong to exempt the NBS from the reserve requirements that other financial institutions are subject to, Murray said he could not understand the exemption on taxes on earnings for the Society.
Speaking on the legislation, Labour Minister, Manzoor Nadir said that not only does the NBS have a portfolio of $40 billion, but it is also the third largest ‘financial’ institution in the country, a fact which cannot be overlooked.
Alliance for Change (AFC) member, Khemraj Ramjattan said he has been asked by several members of the Society to seek a deferral so that they can consult among themselves, and that the lack of scrutiny that the Bill will create could be dangerous to Guyana’s financial sector. “We feel that this is an objectionable approach [for] Governance of the NBS,” Ramjattan said.
He said that because there is no information as to the numbers of members in the NBS, to give a percentage of ten as the requirement for calling a meeting can be open to misinterpretation. “This is about entrenching the Board, rather than entrenching the shareholders,” Ramjattan said.
At this, Housing and Water Minister, Irfaan Ali shot back that rather than entrench the Board, what the Bill does in essence is relieve it of its power, in that it  allows the NBS to adopt measures in keeping with good corporate governance practices. “It has nothing to do with greater power; in fact, it is a reduction in power …these amendments will institutionalize scrutiny at the NBS,” Minister Ali said.
In moving ahead with the Bill, Minister Singh said that there was nothing wrong with the Government bringing the Bill in its present form for passage in the National Assembly. “This Bill represents a significant step forward. As far as we are concerned, the Bill in resoundingly in the public interest,” the Minister concluded.