Guyana’s Financial Institutions Act: New Capital Requirements for Licensed Financial Institutions
The Guyana Financial Institutions Act has introduced new capital requirements for licensed financial institutions to ensure their stability and protect depositors’ interests.
Capital Requirements
According to Section 17 of the Act, a licensed financial institution must maintain a minimum capital base of not less than $250 million. This capital can be satisfied through various means, including:
- Keeping it on deposit with the Bank of Guyana or a correspondent bank approved by the Bank
- Investing in foreign government securities
- Purchasing marketable obligations issued by the Government of Guyana
- Providing capital in such other fashion as the Bank may permit
The Act also allows the Bank to specify minimum capital requirements for financial institutions that do not take deposits. In determining these requirements, the Bank will take into account the types of business conducted by the institution and other factors deemed necessary.
Capital Base Requirements
Section 4 of the Act requires every licensed financial institution to maintain a capital base in an amount not less than a percentage of its total assets, contingencies, and off-balance sheet commitments. The Bank may specify this percentage based on:
- The type of banking or financial business conducted by the institution
- Other factors deemed necessary
In determining the total assets, contingencies, and off-balance sheet commitments, the Bank will consider the institution’s:
- Financial history, including its financial statements
- Management structure
- Corporate governance practices
Purpose of New Capital Requirements
The new capital requirements aim to enhance the stability and resilience of Guyana’s financial institutions, thereby protecting depositors’ interests and promoting confidence in the banking system.
Key Provisions
- Minimum capital base requirement of $250 million for licensed financial institutions
- Various means of satisfying the minimum capital base requirement
- Bank to specify minimum capital requirements for financial institutions that do not take deposits
- Capital base to be a percentage of total assets, contingencies, and off-balance sheet commitments
- Penalties for non-compliance, including fines and other sanctions
Implementation
The new capital requirements will come into effect upon the publication of this notice in the Official Gazette. Licensed financial institutions are advised to ensure compliance with these new requirements.
Contact
For further information or clarification on the new capital requirements, please contact the Bank of Guyana at [insert contact details].