Grenada’s Banking and Financial Services Sector: Changing the Game in Grenville
The recent announcement of RBTT bank to close its branch in Grenville St Andrew Grenada and consolidate some other branches has taken the nation by surprise; this will definitely change the game in Grenville.
First of all it is very important to note that money is created by banks through debt. Anytime a bank grant a loan, it is creating money, and not necessarily paper or coins that one can feel. It is creating electronic money that persons can see right in front of them when checking their balances in an ATM Machine or on a bank statement. This type of money makes up over 90% of the money in the economy.
With the closure of the Grenville Branch of RBTT, the bank has ceased to create new money from its Grenville operation. This doesn’t mean that there will no longer be money being created in Grenville because there are a number of other Banks and Credit Unions in the game still. However this will create a void, a void that will have to be filled by the other banks and credit unions.
Important to note is that local branches is and will remain a crucial part of a nation’s financial infrastructure, even as more customers manage their accounts via the Internet and mobile phones. Many banks close their branches mainly to cut cost and increase profits for shareholders. There is however a social cost to this, when banks close their branches in low income areas such as Grenville and Surrounding areas, the needs of the people do not disappear. I do hope that other institutions do not follow because this can leave one to fall prey to financial predators such as pay day loans institutions and others who can exploit persons with very high rate of interest.
With the closure of the Grenville Branch of RBTT, some of the new accounts that were opened will be lost to the remaining Credit Unions and Banks, and some of the potential accounts that would have been opened will now be opened in other banks. I expect many clients to transfer their loans and savings to some of the closer institution, it will be an inconvenience and a hassle for someone to leave Sauteurs to go all the way to Grand Anse to get information about their account as oppose to going to Grenville.
Another angle to this is the amount of Jobs that will be lost in an already ailing economy by the bank closing its doors. In many cases some persons may be the sole breadwinner in a family and with no job, an entire family is affected. Persons are now without an income yet the bills will have to be paid, their kids need to attend school, and taxes are to be paid, especially VAT since it is a consumption tax and individuals consume whether employed or not.
Branch closure however is not something new to Grenada. Republic bank closed its branch in Petite Martinique some time aback, putting a strain on the people of Petite Martinique. I believe that the remaining institutions in Grenville however can and will be able to continue providing banking services to the people of Grenville. And I encourage persons to be careful with the institutions they are choosing to conduct their financial transaction; I am a promoter of Local banks and Local Credit Unions. The profit from these institutions remains locally in Grenada to help build the economy especially with the Credit Unions.