BY IRWIN ANGIKI
The Bank of the South Pacific (BSP) has revoked its infamous cash-handling fee, Parliament was told on Monday, August 4, 2025.
Launched on June 28 this year, BSP’s new policy charged a 1 percent fee on cash deposits or withdrawals $20,000 or more per account, per day.
The Office of the Opposition, public and businesses pushed back since this new BSP policy posed a costly toll on businesses and individual customers of the bank. This followed the common practice of cash handling in the Solomon Islands.
Speaking in parliament on Monday, August 4, 2025, finance minister Harry Kuma said BSP has revoked its fee upon directions from the Central Bank (CBSI).
“Soon as this BSP’s fee happened, customers quickly complained to CBSI. So CBSI quickly responded and remedied the situation by directing BSP to withdraw the charges that it gave its customers, and also directed the bank to reimburse its customers affected with whatever it had charged them.
“Some penalties were also imposed on BSP too. BSP also confirmed to CBSI that it will not reactivate that policy,” he said.
The leader of Opposition had raised a question on the floor of parliament directed at the finance minister, to ‘explain to the house the impact of the recent fees increases imposed’ by BSP on businesses and the economy.
Minister Kuma said given the short life span of BSP’s controversial fee and the bank reimbursing affected customers, there was no impact on businesses and the economy.
“It’s a very short period of time that it happened, and I think that there is no implication to businesses and the economy,” Kuma said.
Opposition Leader Matthew Wale told parliament yesterday that the CBSI had imposed a penalty of $10,000 on BSP, which he labelled as ‘a lousy amount’.
Mr Wale also criticised that CBSI’s only regulatory requirement which BSP had breached was that it had not given notice to its policy change.
“I’m also aware that the only regulatory requirement there where BSP breached is that it did not give notice. What an inadequate, absolutely useless regulatory requirement.
“If BSP had submitted and had given notice, maybe a month’s notice, they would have not breached any of the regulatory requirements.
“That is just, in this day and age, it shows that CBSI is not doing its job. And this is a matter affecting many, many people and, of course, businesses, most of whom are small businesses that are affected.
“It does call for some legislative response,” Wale said.
Meanwhile, a major locally-owned Honiara business confirmed to Island Sun yesterday that BSP had reimbursed it.
The business had lost nearly $16,000 in less than a week due to BSP’s fee in early July.
And, responding to a complaint letter to the CBSI, Governor Dr Luke Forau had assured the local company that CBSI ‘has already taken the necessary regulatory actions to address this matter by instructing BSP to revoke the fees and reimburse all the clients that have been affected’.
The company told Island Sun that BSP’s fee had affected its daily operations then, with a significant amount of revenue gone towards the fee, and rosters of the nearly-150 employees reduced until the matter was resolved.
CBSI did not respond to email requesting comments yesterday. Attempt to reach BSP for comments were futile; calls to its phone 21874 went unanswered or diverted to voice message.
Background:
On June 28, 2025, BSP began charging one percent on cash deposits and withdrawals $20,000 or more, per day, per account.
The bank did not give any reason for this hefty fee. A notice on its website on May 28, 2025, simply told customers to expect this new rate along with other changes to take effect June 28.
Opposition Leader Wale criticised this move by BSP in a media statement on July 3.
The following week, several businesses reported feeling the pinch on their profits, with many complaining that they were not aware of BSP’s new fees.
One major local Honiara-based business told Island Sun that BSP’s new fee was eating away around $4,000 per day via cash deposits.
This was nearly half of their profit per day, the business owner told Island on condition of anonymity.
It is understood the business will this week lay off the first batch of its workers in response to BSP’s fee to cover costs.
Other businesses are also reportedly making similar ‘inconvenient’ adjustments to counter BSP’s new fee.
Some businesses are factoring the cost of BSP’s fee into their service and goods prices.
“We have marked up our prices for our products and service to cover this new BSP fee,” one business owner, who requested anonymity, told Island Sun over the weekend.
Another business owner said it is now depositing below the $20,000 minimum mark to escape the ‘one-percent penalty’.
“We now deposit below $20,000 to avoid BSP’s one-percent penalty. But, this is inconvenient since we have left-over cash takings and this accumulation will soon force us to consider a second account or bank,” the business owner told Island Sun, also on condition of anonymity.
In the Solomon Islands, transaction using hard case is the norm. Digital exchanges is still far behind.
BSP’s new fee is projected to hit hard on people and businesses.
Wale, in his July-3 statement, described the increase as an unreasonable charge that will penalise legitimate economic activity of everyday Solomon Islanders.
“This is an unjustifiable fee on people simply trying to access or manage their own money. Many Solomon Islanders, particularly those in the villages, those running small businesses, schools, or churches, are forced to operate in cash. This fee punishes them for circumstances they did not choose.
“Many customers of DBSI are ordinary Solomon Islanders who repay their loans in cash. DBSI, who banks with BSP, will then be charged one percent for its deposits. If DBSI deposits $300,000 per day, it will be charged $3,000 per day. It is not hard to imagine how this will then affect DBSI interest rates. CBSI must clamp down on this,” Wale said.
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