By EDDIE OSIFELO
MEMBER of Parliament for Small Malaita, Rick Hou has raised concerns over the long-term viability of the Development Bank of Solomon Islands (DBSI).
The four areas Hou raised when debating on the $4 billion budget are:
- its capitalization: for DBSI to play its role effectively it needs to be adequately capitalized – at least $100 Million injection;
- Governance: it is critical that positions on the Board and senior management of the Bank are filled with individuals who pass the “proper and fit test” ;
- Political influence and pressure: this is a major reason for the downfall of the former DBSI.
Hou said it is important that government must keep at an arms-length from the Bank.
“By the look of the current Board make-up, there may be cause for concern; iv) prudential financial management; the Bank management must maintain sound financial management.
“From the numbers provided by the Minister I am concerned that DBSI appears to be on a lending spree already,” he said.
Hou said out of the recent capital injection of $55 Million under the Economic Stimulus Package, the Bank has already lent out $58.3 Million by February this year.
“One would be concerned that sooner than its doors were opened for business, DBSI would be overleveraged already.
“Sir: Based on the foregoing observations, I strongly urge the CBSI to keep a close eye on DBSI to ensure normal prudential guidelines are observed by the Bank. We don’t want to repeat the mistakes by the former DBSI,” he added.
