By Vernon Daley, Staff Reporter 
Senator Norman Grant said the loan portfolio for PC Banks had moved from a mere $200,000 in 1994 to the current $1.2 billion and (right) Minister of Agriculture, Roger Clarke, urged persons who benefit from loans issued by the PC Banks islandwide, to repay the full amount, and on time.
DESPITE A rationalisation programme which was concluded in 1996, the financial viability of the island's People's Co-operative Banks continues to be worrying.
According to the 2000/2001 report of the Agricultural Credit Board tabled in the House last week, the level of income earned by the banks is not enough to meet their administrative expenses. Against this background, further mergers are being suggested to turn around the banks.
As at March 31 2001, there were 173,246 members of the island's 14 PC Banks. As at that date, just over $831 million was loaned by the banks while loans and interest collected stood at about $245 million.
According to the report, some of the reasons for this mismatch between the banks' earnings and expenses include:
- a general increase in administrative expenses;
- high levels of arrears resulting in reduced operating income;
- delays in processing applications for loans due to absence of marketable
securities and other factors; and
- uncertainty of markets resulting in loans not repaid on a timely basis.
"The statistics from the PC Banks indicate that the banks realised growth in terms of membership, share capital, savings portfolio and loan portfolios. However, the individual banks have been operating at a loss," the report said.
Minister of Agriculture, Roger Clarke, last week urged persons who benefit from loans issued by the PC Banks islandwide to repay the full amount, and on time.
"Some people pay back and pay well, but there are some who believe that the bank must only lend money, especially when they believe that it has some connection with Government. The fact is that the PC Banks (which target farmers for loans) cannot survive if loans are not honoured," the Minister emphasised.
Mr. Clarke was speaking recently at the first annual general meeting of the South St. Elizabeth Integrated People's Co-operative Bank, held in Santa Cruz.
The Minister said the deliberate non-repayment of loans was unfortunate, given the fact that staff members at the banks were always willing to work out a way to assist persons who had difficulties with repayment.
The Development Bank of Jamaica, which had several meetings to find solutions to the financial problems facing the banks, concluded that further mergers be considered.
Speaking in the State of Nation Debate in the Senate in July, Senator Norman Grant said the loan portfolio for PC Banks had moved from a mere $200,000 in 1994 to the current $1.2 billion, an indication of the confidence shown in the institutions.
He explained that the increased activity at the banks was largely due to the rationalisation programme, which has seen the number of banks slashed significantly.
