While anyone can face financial hardship at any given time, many Bahamians seem to believe that as long as they stay away form the bank when they can’t pay, all is well. This is apparently worse when the bank is The Bahamas Government.
My personal experience while working for the former Canadian Imperial Bank of Commerce (CIBC), now FirstCaribbean International Bank, confirms this view. However, Mr. Cash, former FNM Senator, has announced that “There are no untouchables” when it comes to defaulters of loans to The Bahamas Development Bank.
He is quoted as saying:
“Management has been advised to vigourously pursue every collection option at its disposal: There are no sacred cows; there are no untouchables.”
While commercial bank policy was that no more than 1% to 3% of their loan portfolio should be non-performing, the Development Bank has reported that some 51 percent of their loans were non-performing in 2007. An incredible statistic even if loans granted by the Development Bank are generally more risky than private bank credit facilities.
When I was in the bank, loans were classified as non-performing if no payments were received in 90 days. They were not written off as bad debts however. When a loan was ‘classified’ that meant we had to redouble our efforts to contact the client and work out an arrangement for them to repay.
For far too long, it seems that government has chosen to ignore those people that have not made an earnest attempt to repay their loans from the Development Bank.
At the end of the day, there may be legitimate cases where nothing will be collected and the loans written off. However, one would trust that the security held would be sold to cover as much of the debt as possible, and commitments will be obtained from the borrowers to pay, as and when they can. No matter how little the amount.
So often, if a debtor would simply show their face from time to time, banks generally understand and try to assist when people run upon hard times. However, when they pretend they don’t owe the money and ignore their commitment, the banks must use all means available to collect their depositors money or in the case of The Bahamas Development Bank, our tax dollars.
Go for it Mr. Bastian. You have this not so humble bloggers support…in spades!
First, companies that provide services and goods face the same situation of walk away debtors, with even less luck at collecting than the commercial banks.
Second, that policy is all well and good UNTIL, some one connected to someone political undermines their efforts. This of course happens in hundreds of cases.
Our country is run by favour and guilt, meaning, the rules although they exist, can be safely ignored and there is nothing like having something on the other guy. One great big fat compromise, that others pay for. Which others? Why, the ones who honor their debts.
Take for example the union leaders call for an increase in minimum wages.
Has he given any thought as to where that will come from? Before you say that the private sector can afford it, and before you say the government should do it, realise that the very inflation you are blaming for the need, will increase rapidly in adjustment to the new demands on the producers of the economy.
And for the government to give increases, well, the private sector will bear that also, as will the consumer because we must remember, the government produces nothing.