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Saturday, May 26, 2007

Concern about rise in finance companies outside Reserve Bank supervision

The Finance Companies Association has raised its concerns with the rise in number of finance companies setting up in Fiji that are outside the supervision and control of the Reserve Bank of Fiji.

One of the notable ones has been a company from Papua New Guinea which has recently secured approval from Government to provide small payday-to-payday loan facilities to civil servants.

Members of the Fiji public should note that no company is authorised to accept deposits from the public in Fiji without being licensed by the Reserve Bank of Fiji.

Read more on the Finance Companies Association concern in a copy of an article in the Fiji Times, Saturday, 26 May 2007, below.

"Sharmas credit worry, Saturday, May 26, 2007

The Finance Companies Association is concerned with the number of lending institutions emerging outside the ambit of the Reserve Banks powers.

The associations newly-appointed chairman Parmesh Sharma said there were only three licensed credit institutions in Fiji. These were Credit Corporation Fiji Ltd, Merchant Finance and Investment Company Ltd and Home Finance Company Ltd.

Mr Sharma, who replaces Ross McDonald as association chairman, warned of bad credit practices within financial institutions not directly governed by RBF guidelines.

"The consumption rate is so high and daily livelihood has to be met. One of the areas of concern for the association has been the increase in the number of finance companies that are not licensed and that are not operating outside the regulatory control of the Reserve Bank," he said.

"The association has received reports of high interest rates and fees being charged by these unlicensed companies and this has been confirmed by recent media reports."

Mr Sharma said proper disclosures were needed from such financial institutions which provided soft loans as it could lead to money laundering.

It needs policing and its trickle down effort translates into mortgages and unnecessary litigation.
Mr Sharma was appointed chairman of the association following its annual general meeting in April this year.

He is general manager of Merchant Finance and Investment Company Ltd.

Mr McDonald is managing director of Credit Corporation Fiji Ltd.

He said the association had continued to prove its effectiveness as it was able to discuss many areas of mutual interest with the RBF while at the same time commenting on new policies implemented by the bank."

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