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The new Banking Act is uniformly in force in the eight member
territories of the Eastern Caribbean Currency Union, although
there are some minor differences in the structure and style
of the Act. Amendments to the new Banking Act were based in
part on the Basle Committee on Bank Supervision
- 25 Core Principles for Effective Banking Supervision
and legislative gaps identified by the ECCB. Financial globalisation,
the complexities of large conglomerates and the diversity
of the products and services offered by financial institutions,
have compelled regulators to adopt a more risk focussed approach
to supervision. The new Banking Act addresses the need for
effective, risk focussed supervision of financial institutions
to ensure the safety and soundness of the financial system.
It has refined the overall regulatory regime and enhanced
the powers of the ECCB.
The table below illustrates the number, year and commencement
date of the Banking Act in each member territory.
| TERRITORY |
NO |
COMMENCEMENT
DATE |
| Anguilla |
No 9 of 2005 |
1 January 2006 |
| Antigua & Barbuda |
No 14 of 2005 |
1 January 2006 |
| Commonwealth of Dominica |
No 16 of 2005 |
31 March 2006 |
| Grenada |
No 19 of 2005 |
31 March 2006 |
| Montserrat |
No 2 of 2005 |
1 May 2005 |
| St Kitts and Nevis |
No 4 of 2004 |
4 November 2005 |
| Saint Lucia |
No 34 of 2006 |
1 April 2007 |
| St Vincent and the Grenadines |
No 33 of 2006 |
10 April 2007 |
The Act applies to all institutions that conduct banking business.
It requires that a banking licence be obtained from the Minister
of Finance before a financial institution can engage in banking
business. Contravention of this requirement is an offence
punishable by fine or imprisonment. Each application for a
banking licence is investigated by the Central Bank, which
then makes a recommendation to the Minister.
Some of the issues considered by the Act include:
| 1. |
Restrictions on the use of
names containing the words "bank", "financial
institution", "savings" and "loan";
|
| 2. |
Financial institutions are prohibited
from undertaking certain fundamental changes within their
business operations without obtaining the approval of
the minister. Among the changes necessitating express
approval of the minister are name changes, mergers and
reduction of assigned or paid up capital; |
| 3. |
Situations where a bank’s licence
will be revoked; |
| 4. |
Financial institutions maintaining a minimum
level of paid up capital, reserve funds and specified
assets; |
| 5. |
Minimum requirements for the submission
of information to the ECCB; |
| 6. |
Examinations of licensed financial institutions
to determine if they are in a sound financial condition
and to ensure that they comply with the legal requirements;
|
| 7. |
The powers and measures available to the
ECCB to prevent adverse consequences; |
| 8. |
Minimum requirements for determining whether
a person is fit and proper to be a shareholder, director
or officer of a licensed financial institution; |
| 9. |
Prudential Guidelines; |
| 10. |
Abandoned property; |
| 11. |
Receivership, liquidation and reorganisation
issues; and |
| 12. |
Transfer of Banking Business |
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