The Central Bank said yesterday it had ordered commercial banks and credit unions not to use customers’ COVID-19 unemployment benefits to pay off loan facilities.
The regulator, in a statement released yesterday, said it had asked financial institutions to communicate with customers on “the processes” that will be used to reimburse customers whose benefit payments have been withdrawn to service the facilities. of credit in progress. He added that he “did not approve” his licensees who redirect payments for services to clients without their knowledge or permission.
The Central Bank said it had taken action because an increasing number of beneficiaries were avoiding direct deposits into their accounts to protect their unemployment benefits from lenders, which was “not in the interests of a orderly payment system “.
“The Central Bank has taken note of public concerns that unemployment benefits and equivalent government assistance payments for COVID-19 relief may be unwittingly applied to loan payments when sent directly to accounts deposit, ”the regulator said. “In addition, the bank is aware that recipients may choose less efficient payment options to avoid this suspected practice.
“The Central Bank does not approve the involuntary reorientation of unemployment benefits or other assistance payments financed by the government. Given the volume of these payments and the public health / safety concerns regarding the processes by which they are converted to cash, there is no need to avoid direct deposits. in the interest of the proper functioning of the national payment system and the national banking system. “
The Central Bank added that it had “therefore requested that commercial banks and credit unions maintain adequate systems to preserve replacement income from COVID-19 for their intended use of the social safety net.”
“Financial institutions have also been asked to communicate with their customers, through accessible public channels, about the processes that have been put in place for recipients to recover products that have been unwittingly applied for other purposes,” a- he continued.
“Recipients of unemployment benefits and assistance are urged to have payments sent directly to their deposit accounts and to seek correct advice from their financial institutions on how to specify their account numbers.”
The National Insurance Board (NIB), meanwhile, revealed yesterday that the government-funded self-employment benefit program it previously administered is now closed after some 7,183 claimants received a collective $ 15.5. millions of dollars.
The national social security system said its own unemployment compensation initiative had paid out $ 84.2 million to 36,813 claimants since the start of the COVID-19 crisis in mid-March 2020. However, Dr Nicola Virgill-Rolle, director of the NIB, lamented in a statement that he had seen “far too many reimbursements” of benefits because beneficiaries had not provided bank details or had given incorrect information.
Noting that the NIB has moved away from a previously manual process, where unemployed Bahamians had to first register with the Ministry of Labor and obtain the B81 work card in order to qualify for benefits, she said: “ Recognizing the realities of COVID-19, NIB has changed its process to allow direct deposit payments and payments through employers.
“However, some applicants did not provide banking information or their banking information was incorrect, so checks had to be prepared. We were seeing far too many returned payments that then needed to be reissued to customers.”