NASSAU, BAHAMAS — The Central Bank has extended the moratorium on the consideration for payment service providers and money transmission businesses through September 2022.
The regulator, in its recently released 2020 Financial Stability Report, noted: “Amidst the heightened pandemic risks and accelerated modernization trends in the payments system, the Central Bank extended the period of moratorium on the consideration of new license applications for payment service providers (PSP) and money transmission businesses (MTB) through September 2022.
“This continued to facilitate the stable, orderly adjustment of the system’s expanded list of participants in the payments space.”
The regulator had last extended the moratorium until the end of this year. At the time it was put in place, there were three licensed payment service providers, with two other applications under review. There were five money transmission businesses with services provided through a network that included 23 agents. Money transmission businesses are licensed and regulated under the Banks and Trust Companies Regulation Act, 2000, the Banks and Trust Companies (Money Transmission Business) Regulations, 2008 and provisions under the Central Bank of The Bahamas Act, 2000.
The regulator’s report also noted that despite the global impact of the COVID-19 pandemic, financial risks within The Bahamas remained contained in 2020, “without material immediate nor medium-term threat to the stability of the sector”.
“During the review year, supervised financial institutions (SFI) had to adjust operations to comply with the Emergency Powers (COVID-19) Order, 2020 and regulations issued under the order as a result of the pandemic,” the report noted.
“The Central Bank remained focused on safeguarding and strengthening the resilience of the sector, with its release of the COVID-19 Guidance Notes, which provided certain temporary relaxed accommodations to SFIs to alleviate some of the difficulties presented by COVID-19.
“Focus was also on endorsing prudentially sound credit risk management policies, alongside a policy of leniency for domestic borrowers who were displaced from their jobs and unable to service their debt.
“In addition, owing to the uncertainty surrounding the severity of the impact of the pandemic, domestic banks maintained healthy capital buffers to absorb any credit losses.
“Broad observations from consolidated results indicated that the domestic systemically important banks (DSIB) remained resilient, despite the challenges posed by the pandemic. COVID-19 related credit exposures were well contained, as domestic banks and credit unions moved quickly to introduce loan payment deferral schemes to assist borrowers whose debt servicing capacity were adversely impacted.
“As deferment schemes conclude, it is expected that there will be a rise in non-performing loans in 2021, albeit posing no threat to financial stability, and with expanded provisioning already anticipating such adversity.”
