A long-time parliamentarian and the labour minister have thrown their support behind the depositors insurance bill, calling it consistent with the credit union principle of “people helping people”.
The Protection of Depositors Insurance Bill was passed in the House of Assembly on Tuesday, which the lawmakers described as a timely move to create inclusion for ordinary Bajans and small businesses who lacked a safety net in the event their credit union failed or was destroyed.
Christ Church West MP Dr William Duguid said the legislation completed work started two decades ago when deposit insurance protection was extended to commercial banks.
The legislation would end what he described as a two-tier system where bank depositors enjoyed protection while credit union members did not, he said.
“This nullifies this two-tier system. We in Barbados don’t want a two-tier system, that only the banks got the coverage and the credit unions ain’t got none. We’re saying no.”
Using the example of a woman from Sargeant’s Village who saved small sums earned from selling food, he said the legislation would provide peace of mind for ordinary savers.
“This legislation is to protect her. Through this legislation, Dolores could say, you ain’t got to worry, your money insured, and after a period of time, you’re going to get back your money, and that’s what this legislation is about.”
He added: “That’s what this legislation is about, protecting the small man, the man that just got the $25 000, the $20 000, the $10 000, the $5 000, whatever it is up to $25 000.”
Duguid also praised provisions allowing deposit insurance limits to be reviewed periodically rather than requiring amendments to legislation.
“When you have an opportunity every three years to come and review the levels that you set at, it is important.”
The veteran parliamentarian further welcomed provisions allowing the corporation established under the legislation to act as a liquidation authority in the event of a failure.
“What this legislation also does is it allows now the corporation to be the liquidation authority.”
He said this could help speed up the process of compensating depositors.
“This is why this legislation is good. It is appropriate for the time and most of all, it is about the motto of the credit union, people helping people.”
Minister of Labour Colin Jordan also backed the legislation, describing credit unions as institutions created by ordinary people to overcome financial exclusion.
“Credit unions represent the people’s institutions. The credit union movement is the successor to the landship. The credit union movement is the successor to the susu. The credit union movement is the successor to the meeting turn.”
The bill represented another step in recognising the importance and legitimacy of credit unions within the financial system, Jordan said.
“Offering protection to depositors in these institutions is another step in saying to those depositors, those owners of these institutions, the state sees you.
“The state understands that these are credible institutions. And the state is prepared to put systems in place that will further protect your investments in your institutions.”
The St Peter MP noted that with approximately 200 000 members, the credit union movement represented a significant portion of the population.
“With such a large membership base, it is incumbent upon a government to make sure that there are protections in place for those large numbers of persons.”
Jordan said the legislation was especially important for people with modest savings.
“This bill now speaks directly to them.”
He explained that while deposits held through credit unions were previously exposed to risk, the new legislation would provide protection of up to $25 000 per depositor.
Jordan acknowledged concerns from smaller credit unions about the cost of participating in the insurance scheme but argued that protecting depositors must remain the priority.
“We need to recognise that this is about protecting the shareholders, the owners, the ordinary people of this country who have put their faith in the organisation and who have put their money where their mouths are.”
He also highlighted the government’s planned $1.7m contribution to establishing the insurance fund.
For Jordan, that investment demonstrated the government’s commitment to protecting ordinary Barbadians and supporting the credit union movement:
“I believe that this investment says to the people of this country that we understand the role of the credit union movement, we recognise its importance, and we are prepared to allocate resources to make sure that the people of this country are protected.”
Commending the bill, Jordan said it reflected the government’s commitment to institutions built by ordinary people:
“We stand with the people. We stand with their institutions.
“I commend this protection of depositors bill to this house and to this country.”
(LG)
