The Bahamas Central Bank is being urged to lift lending restrictions on many local commercial banks which argue that the limits are hitting profits and are contributing to a high level of surplus liquidity in the nationﾴs banking system.
According to the Bahama Journal, the liquidity surplus presently stands at around $167 million, when levels at this point in the year are usually nearer $75 million, with foreign reserves at a level of $500 million. However, the Central Bank Governor Julian Francis has declined to comment on the issue until after a meeting with his Monetary Policy Committee tomorrow (November 5).
In an previous interview with the Journal on the subject, Mr Francis sought to defend the imposition of the lending limits, explaining that they have been put in place to ﾓprotect the external reserves during a time of relatively slow economic activity when our economy is not generating the level of foreign currency which it would normally generate if the economic activity were stronger.”
In September 2001, the Central Bank placed a limit on the total amount of lending of $3.7 billion. Some in the banking sector say this is too restrictive and is inhibiting their ability to lend and make profits.
Bankers are due to meet Mr Francis at the end of this week to discuss the issue.
By Amanda Banks, Tax-News.com
