Dear Editor,
Commercial Banks continue to make obscene profits as was demonstrated by a 31% increase in GBTI’s declared after-tax profits this week, and which has been the case even during recessionary times such as the last-pandemic years, when all businesses were contracting. If this was due to innovation and productivity, these growth rates would be acceptable. But this is entirely due to the exercise of Market Power by these entities, which regulation was intended to curb and eliminate.
Bank regulation works in other countries but not in Guyana. Its absence here allows these banks to pay their depositors low levels of interest (<1%), to lend those deposits at high interest rates (>8%), and to charge their customers fees that have no relationship to costs. An example of the latter is charging a $1,000 fee to make an electronic transfer between two accounts in the same bank, whereas if the transfer is between accounts in different banks, a more elaborate and costly transfer, the fee is $100, probably set by the Regulator. These Banks also return electronic transfers make to the main branch of a Bank if the account is at another branch of that same Bank as if its account database is not centralized. But there’s a fee associated with the return that enhances the bank’s revenue stream.
And the Regulator, which in Guyana is the Central Bank or Bank of Guyana, appears complicit in measures to increase market power of these banks instead of eliminating it, as its role requires. The Banks will charge customers for blank cheques at an enormous markup compared to what they can be produced for. Consequently, bank customers have been producing their own cheques and moving away from those supplied by banks. To prevent this, the Regulator now requires an obscure emblem, except to ultralight, on all cheques it clears. This emblem serves no security purpose and is only available to the banks, giving them a monopoly on cheque printing, or more market power. Further, it now appears that cheques can be returned by banks as invalid with a fee attached if the date on the cheque is not in a specific format.
The Guyana Bank Regulator is failing its citizens in not adequately applying the practices of regulation, one of which is that all charges/fees be cost justified, and by doing so, is allowing Guyanese to be ripped off by banks it is supposed to control.
Yours faithfully,
Louis Holder
Stabroek News
