EVEN as the Bank of Jamaica (BOJ) has reduced the reserve requirements for commercial banks, a new kind of banking fee is making customers pay for having too little money in their accounts.

The two largest commercial banks in Jamaica by branch network charge depositors a fee for balances below a certain amount. Scotiabank charges $150 per month for balances below $5,000, while the National Commercial Bank (NCB) charges $50 per month for balances below $2,000. Estimates are that up to 60 per cent of the deposits in commercial banks are below $5,000.

The BOJ made effective July 1 this year a reduction in the reserve requirements for deposit — taking institutions such as commercial banks and building societies. The reduced requirements which is two percentage points from 14 per cent to 12 per cent, applies to Jamaican-dollar deposits. Cash reserve requirements for foreign currency deposits were already reduced in March to nine per cent of clients’ deposits.

This means that the institution will have to reserve less of the total amount of depositor’s money to meet the requirements of the BOJ. In other words, if total depositors’ fund equal $100 million, the institution is now required to have on hand just 12 per cent or $12 million of the total, not the 14 per cent or $14 million that was previously required.

“These adjustments form part of the general easing of monetary policy that is consistent with the improved outlook for inflation and the relatively weak demand conditions in the economy,” the BOJ reports in a release.

However, while the BOJ has signalled an easing of monetary policy with the move, the commercial banks have instituted the new measures to encourage individuals keep your money in the bank.

Sushil Jain, financial analyst, argues that despite the recession which has led to job losses and reduced earnings it is in the interest of the financial institutions to continue to maintain a minimum balance and cover operational costs, by charging a fee for the small balances.

“I think that is fair. In my view that is not unfair. In order to keep their business they have to keep some records and have other operational costs. $2,000 is nothing. I think that’s fair enough,” Jain said. “That means those people really don’t need a bank account. If I have $2,000 I can keep it under my pillow,” Jain said.

He said the real problem with bank fees is that there are too many. “They have fees for too many things. Everything is a fee.” “What happens is that the whole corporate sector has gone astray, nobody questions them,” Jain said.

Jain believes that the central bank should establish a commission to oversee the fees charged by the commercial banks, much like what has been done in Barbados to monitor the fees charged to customers.