Bank to address money lending

By PETER ESILA
THE Bank of PNG does not regulate and supervise moneylenders because they do not accept or collect deposits from the public, says assistant governor Ellison Pidik.
Pidik, pictured, told The National that BPNG was in the process of addressing this in a systematic manner.
He said laws which empowered the Central Bank like Banks and Financial Institutions Act, Savings & Loan Societies Act, Superannuation (General Provisions) Act, and Life Insurance Act were only to do with protecting the interest of depositors.
These included commercial banks, finance companies, microbanks, savings and loans societies, superannuation funds or life insurance policy holders.
“Money lending activities are an unregulated activity,” Pidik said.
“The Bank of PNG, in collaboration with other development partners such as the IFC (International Finance Corporation), is going to introduce a financial consumer protection regulatory framework which will address many key issues relating to consumer protection and empowerment.
“In recent times, it has come to the Bank of PNG’s attention, and the Bank has become increasingly concerned, that those money lenders are charging very high interest rates on loans they provide to their customers.
“This is to the extent that, based on information we have, most of the borrowing customers have found it difficult to repay those loans.
“Some have to borrow elsewhere to repay previous loans, which is really a debt trap.
“Other information we have received is that some of the borrowers have gone to the extent of surrendering their bank cards to the money lenders, just so that money lenders can lend to them.
“There are other stories we are in receipt of which are quite alarming.”