By EDDIE OSIFELO
FORMER Prime Minister Rick Hou has raised concerns about certain provisions within the Central Bank of Solomon Islands (CBSI) Amendment Bill, particularly regarding credit utilities and non-bank credits.
These concerns were voiced during the parliamentary debate on the bill yesterday.
Clause 16 of the Central Bank of Solomon Islands (Amendment) Bill introduces an amendment to Section 29 (1) of the Principal Act.
This amendment seeks to include credit utilities and non-bank credits as part of the broader credit information system.
While this amendment is intended to strengthen the credit information system, Rick Hou questioned its practical implications, especially in the context of the Solomon Islands.
In his parliamentary address, Hou expressed doubt about the advantages of this amendment in the local situation.
He cited the common occurrence of defaults in utility payments, such as water and electricity bills.
According to Hou, every time an individual defaults on these payments, that information is recorded in the creditworthiness database that banks maintain.
Consequently, when individuals approach banks for loans or open new accounts, their creditworthiness is compromised.
Hou further pointed out that this measure could have a severe impact on the majority of Solomon Islanders, many of whom might default on payments due to reasons beyond their control.
As an example, he mentioned that he had experienced water supply cuts because he did not receive an invoice on time, which led to immediate disconnection on the day of the invoice delivery.
Addressing another issue, Hou raised concerns about “politically exposed persons” (PEPs). He referred to the global practice of “know your customer” policies and highlighted that PEPs encompass family members and individuals conducting business with politicians.
This, he argued, could affect numerous small businesses and individuals seeking to open bank accounts, including the country’s 50 Members of Parliament.
Hou emphasized the potential consequences of these amendments in a money laundering context.
He noted that political leaders have been a significant source of money laundering globally and expressed reservations about how these measures might impact Solomon Islanders.
He concluded by stating that these changes might inadvertently push many Solomon Islanders into the “black market” or encourage them to keep money in unconventional places like boxes, beds, and pillows.
He questioned the feasibility of the CBSI’s financial inclusion policy, which encourages banking for all, particularly in the provinces.
While acknowledging the necessity of measures to ensure a clean banking system, Rick Hou underscored his concerns about the potential negative repercussions that these amendments might have in the Solomon Islands’ unique socio-economic context.
The debate on these amendments continues, as Solomon Islands’ lawmakers deliberate the potential impact and implications of these changes on the nation’s financial landscape and its citizens.
