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LOCAL FINANCIAL INSTITUTIONS: OWNERSHIP AND REGULATION

In a bid to strengthen financial stability in Grenada, the government has introduced regulations governing ownership and operations of local financial institutions. According to Section 10 of the Financial Institutions Act, no financial institution can transfer its assets or liabilities without prior approval from the Minister, acting upon the recommendation of the Central Bank.

Ownership Requirements

  • No individual or entity can acquire an interest in a local financial institution without disclosing their identity and address.
  • Any change that may have a fundamental impact on the institution’s structure or operations requires prior approval. This includes changes to its name, capital structure, and mergers or consolidations with other institutions.

Regulation of Local Financial Institutions

The Act also prohibits any individual or entity from acquiring an interest in a local financial institution without disclosing their identity and address. Failure to comply with this requirement can result in severe penalties, including fines and imprisonment.

  • The Minister has the power to revoke a licence if a financial institution fails to meet certain criteria, such as maintaining sufficient capital or liquidity.
  • The revocation process involves a notice period of at least 30 days, during which the institution may submit objections to the decision.

Role of the Central Bank

The Central Bank plays a crucial role in regulating local financial institutions, including monitoring their compliance with the Act and issuing orders for divestment if necessary. The bank’s recommendations are guided by criteria that promote financial stability and sound governance practices.

Foreign Financial Institutions

Meanwhile, foreign financial institutions operating in Grenada must notify the Minister and the Central Bank of any changes to their charter or instrument of incorporation within 60 days of such changes.

Importance of Regulations

In a statement, the Minister emphasized the importance of these regulations in promoting transparency and accountability in the financial sector. “These measures are designed to ensure that our financial institutions operate in a way that is consistent with international best practices and protects the interests of depositors and the broader public,” the Minister said.

KEY PROVISIONS

  • No individual or entity can acquire an interest in a local financial institution without disclosing their identity and address.
  • Financial institutions must obtain prior approval for certain changes, including asset transfers and mergers.
  • The Minister has the power to revoke a licence if a financial institution fails to meet certain criteria.
  • Foreign financial institutions operating in Grenada must notify the Minister and the Central Bank of any changes to their charter or instrument of incorporation.

PENALTIES FOR NON-COMPLIANCE

  • Failure to disclose ownership information: fines up to $2,000 and imprisonment for three months.
  • Acquisition of an interest in violation of the Act: fines up to $5,000 and imprisonment for six months.
  • Failure to comply with licence requirements: revocation of licence.

CONTACT US

For more information on these regulations or to learn how they may affect your financial institution, please contact the Central Bank at [insert contact information].