Senior financiers in Jamaica’s banking system says “migration and unexpected expenses” are amongst the top two reasons why people are late to pay their loans each month. An increase number of Jamaicans are falling behind on their regular monthly loan payments, but the central bank says it is not yet worried.
The data captured in the figures are for past due loans — which are loans that have not been paid from anywhere between 30 days up to 89 days.
People who migrate each year, and turn to banks to borrow money they have no intention of repaying has become a headache for the banking sector. Although it is known that debt doesn’t magically disappear when one moves, the debt collection does become more challenging for issuers if you leave the country. Because of each country’s unique credit systems and regulations, it can be difficult for creditors to track someone who migrates. Reports state at least one group of Jamaican migrants is culpable more than others, but declined to name the group. Overall, migrants, listed as overseas residents, were late on payments totaling $6.8 billion in March. That’s about 15.8 per cent of the total for that month. Later data show it has since increased to $10.2 billion in May or about 25 per cent of all repayments that are past due.
Actors in the nation’s banking sector said the growth in past due loans has been kept under control by financial institutions keeping on top of those whose loans remain unpaid, using e-mail and phone calls to give follow-up reminders within a few days after the loan is past due.
The introduction of credit bureaus in Jamaica has also helped, with people mindful of the harm non-payment can cause to their credit history, and the impact that can have on future loan requests also playing a role in modifying behavior.
Overall “The stock of these loans on the balance sheet of the deposit-taking institutions grew by 32.1 per cent to $42.9 billion at March 2024 from $32.5 billion at March 2023,” the central bank said. Further data show past due loans rose again to $50.1 billion by the end of April before declining to $41 billion at the end of May.
But the Bank of Jamaica (BOJ) said the increase in past due loans must be looked at in the context of the growth in the overall loan book of the nation’s eight commercial banks and one merchant bank. From that perspective, the ratio of past due loans to total loans were up “marginally to 2.96 per cent at March 2024”, the central bank pointed out.
