WHEN the Private Sector Commission  (PSC) held its Annual General Meeting in May,  the President, Dr. Irfaan Ali, gave the feature address.  One of the main themes of his address was that the banking system reform was necessary if the economic revolution the country was now undergoing was to achieve its fullest potential in the shortest time.

We will consider banking reform from both the macro and micro standpoints, and instead of trying to reinvent the wheel, we will mention President Ali’s valuable recommendations on the overall reforms before touching on the more minor day-to-day functionality of banks.

The banking system will have to adopt the techniques and culture of greater innovation and proactivity and adapt itself to the country’s new dynamic economic environment, which has expanded beyond the oil industry.  By so doing, the Banks will be involved in capital formation and broader economic development. “Yet to this date”, said Dr Ali, ” the banking sector has not responded with the speed, efficiency, reliability and time to exploit the opportunities that are here in Guyana”. Instead, the Banks, as a whole, have confined themselves to their traditional role of receiving deposits and making low-risk loans.  This traditional way of banking can still produce healthy balance sheets and good profits, and banking shares are among the most traded, but President Ali pointed out that this traditional role is very limited.  “The role of the bank,” said President Ali, “is also seeking the opportunity to understand where the economy is going, to create an ecosystem to support where the economy is going and to build upon what is happening in the country. . . Our local Private Sector and local leaders are doing a tremendous job in trying to open up opportunities, especially in the non-oil sector, but the speed at which the bank has been operating and processing does not match the type of dynamism that is in the economy.”

In this regard, we will mention a small example of such an opportunity:  Among the many programmes with which the State is involved is the renewal of the Albouystown ward which is known as “Georgetown’s slum area”.  Independence Boulevard, which runs the length of  Albouystown and, in time, could be made to reach Ogle Airport and, at present, reaches Saffon  Street, which leads to the Cheddi Jagan Airport, places Albouystown in the heart of the business development the country is experiencing.  All the other streets of the Ward have been renewed and other services such as drainage, fire prevention and policing have been upgraded and the Ward is again becoming a desirable location as it was in 1906 when, as a neat suburban village, it was absorbed into the City.

Today, with the development of two off-shore oil companies on East Bank Demerara and the growth of numerous businesses and industries along the bank reaching the Cheddi Jagan Airport and the various Oil installations at Vreedenhoop, thousands who work with these ventures would prefer to live in Albouystown because of its unique strategic location and nearness to their place of work once they could be offered comfortable housing.
The Guyana Consumers Association has proposed to the Banking system the offer of concessionary loans to proprietors who would construct three or four-storeyed blocks of three-bedroomed apartments with income tax rebates etc. The banking system has been silent on this opportunity.

At the Local Content Summit held earlier in the year, the banking sector failed to take full advantage of networking to bring together capital and human resources to foster the growth of large-scale companies and take full advantage of local content offerings. President Ali sums up the milieu: “This requires a big shift in the business mindset of the bankers and the client. . .  It requires the  banking sector to use more analytical tools in defining the opportunities for the country, but, importantly, in modelling those opportunities and then going out to their clients”

The day-to-day running of the banks has much room for improvement.  There is, for example, the issue of bank charges: These charges differ greatly from bank to bank and are sometimes grotesquely high in some banks.  All banks should publish a list of their charges for their various services so that customers can compare them and avoid being exploited, but the banks would not do so unless the Bank of Guyana and the Ministry of Finance require them to conform.

The banks often cannot sell foreign currencies, especially American and Canadian, because they do not have such currencies in hand.  The Banks themselves give conflicting explanations as to why they cannot provide such currencies to customers.  This inability to provide foreign currencies inconveniences small businesses and individual customers and is an issue that the Ministry of Finance should address.
Several banks no longer send depositors monthly statements, so customers do not have the opportunity to check their accounts. This could lead to undiscovered mistakes or even theft.  And if a customer requests a statement of his/her account, payment of a fee is requested.

Simple banking transactions take a long time to complete because the staff, usually intelligent young people, are untrained or not fully trained, and customers consistently complain about the time they have to spend in the banks to complete simple transactions.  Sometimes, the sloth of service is due to a shortage of staff.  These difficulties could easily be surmounted if more competitive salaries are offered and such improved salaries are paid when the profitability of the banks is taken into account.

Other bank services and charges such as mortgages and collaterals are required, and these need to be reviewed to make them fairer and more consumer-friendly.
The Banking System must reform itself to avoid being uncompetitive when proactive foreign companies enter the Guyana market.