Credit unions adjust credit risk rating for MSMEs amid COVID-19

Credit unions adjust credit risk rating for MSMEs amid COVID-19

BY ABBION ROBINSON
Observer business reporter
robinsona@jamaicaobserver.com

Sunday, August 09, 2020

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The COVID-19 health crisis and the associated preventive measures implemented have had devastating consequences for micro, small and medium-sized enterprises' (MSME) operations. However, local credit unions have adjusted or relaxed credit risk ratings to assist MSMEs to stay afloat.

According to CEO of COK Sodality Co-operative Credit Union Limited, Aloun Ndombet-Assamba, credit unions have partnered with the Development Bank of Jamaica (DBJ) under its COVID-19 relief programme to provide support to MSMEs by offering relaxed credit requirements for three months at reduced rates and up to 80 per cent collateral support.

In addition, small businesses were offered a one-year window to submit their tax compliance certificates (TCC).

“This has really allowed us to be more responsive to our micro borrowers who might not have had everything in place,” Ndombet-Assamba told a recent Jamaica Observer Business Forum. “What we ask of our members is to comply with registration regulations, and that is what the Bank of Jamaica expects”.

Under the Proceeds of Crime Act (POCA), customer due diligence and Know-Your-Customer regulations, credit unions can be cited for failing to have updated and accurate identification information for customers, according to Ndombet-Assamba.

“We don't make up these regulations ourselves, we have to conform to the regulations that exist in the wider society and with our regulators. Sometimes our members don't understand that and it's very hard to get over that hump. Which is why we commend the move that DBJ has made to waive the requirements of TCC, so that people don't have to come with their TCC for us to be able to help,” she emphasised.

CEO of Gateway Co-operative Credit Union Limited located in Montego Bay, Ornell Bedasse, further indicated that credit risk management will differ for each credit union and is dependent on each portfolio.

“We partner with small businesses as we consider it as special lending. You cannot treat it how you would if it was a regular car loan. If we have to offer training, in terms of financial statements and how to organise their books and so on, then that's what we do. We call them in for training and we also organise small expos for them. We take a personal interest, and we don't look at them as just a borrowing member but as a partnership, because when they grow, we grow.”


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