Restrictions placed on withdrawal of money from Building and Loan

The modification of the Rules of the St Vincent Building and Loan Association will see members having to wait six months to redeem matured shares. Restrictions have also been placed on how much is withdrawn from special deposit accounts, and how often.{{more}}

A press release issued by the Financial Services Authority on March 4 said because of the “continued run on the organization”, they had “been left with no alternative but to revise and modify some Rules of the Association” in order to limit the damage being done due to an “excessive demand for funds”.

A members’ notice posted on the website of the St Vincent Building and Loan Association (www.svgbla.com) said that with immediate effect, new loans secured on Redeemable Shares will not be available until August 31, 2013; Maturity extensions on loans secured on Redeemable Shares will not be granted until August 31, 2013 and further increases on existing loans secured on Redeemable shares will not be available until August 31, 2013.

“Withdrawals/Redemptions of matured Redeemable Shares are suspended until August 31, 2013. With effect from August 31, 2013, a new Notice Period of 180 days is established for the withdrawal of matured Redeemable Shares. Interest accrual will however continue at the current interest rate,” the notice said.

Withdrawals of interest paid on Special Deposit Accounts are suspended until August 31, 2013, although interest accrual will continue at the current interest rate.

Six months notice is now required to withdraw up to 25 per cent of special deposit balance up to a maximum of EC$25,000 whichever is less, the notice said. Each Special Deposit account is restricted to one notice every six months.

Withdrawal notice requirements have also been established for Ordinary Savings Accounts. The FSA, in their release on Monday, said the effectiveness and impact of these temporary measures will be continuously monitored and will be analyzed and reviewed periodically.

The FSA took over management and control of the St Vincent Building and Loan Association on February 1, after a two-week run on the Asosciation, caused by a letter written by economist Luke Browne in the Vincentian newspaper of January 18. The letter expressed concern about the management and financial health of the 71-year-old institution.