The Opposition People’s National Party (PNP) has unveiled some bold new plans for bringing down commercial bank interest rates, which has been a perennial call by Jamaica’s productive sector, especially the Micro Small and Medium Sized Enterprises (MSMEs).
PNP’s Spokesman on Finance Julian Robinson unveiled the plans during his presentation to the 2025/2026 Budget Debate in Parliament Thursday afternoon. Highlighting that the PNP has a three-pronged strategy to fix this, Robinson acknowledged that at the core of the party’s approach is improving competition in the banking sector.
He made the point that while there are 11 deposit-taking institutions (DTIs) regulated by the Bank of Jamaica (BOJ), and that the reality is only two banks, NCB and Scotiabank, control approximately 70% of the consumer banking market.
“This duopoly means that if these two banks do not lower their interest rates, the smaller banks, which lack significant market share, will not move either. Simply put, there is no pressure for banks to compete by lowering rates,” the Opposition Spokesman on Finance reasoned.
The problem, he cited, is that Jamaica’s banking sector is highly concentrated, which is part of the reason interest rates are not moving down because the sector lacks real effective competition.
Opening up government deposits to all banks
He shared how this will be done by promising that a future “PNP government will take to increase banking competition is to end the long-standing practice of where the vast majority of funds held by government ministries, departments, and agencies (MDAs) are deposited only in NCB and Scotiabank. We are going to open up government deposits to all banks using a competitive system.
Robinson said this is a massive amount of money, approximately 10% of all deposits held across DTIs, that these two banks hold effortlessly, using it to fund their lending activities, without needing to compete for these deposits. He argued that by allowing smaller banks to hold government deposits, this will achieve:
1. Increase competition— Smaller banks will have access to more lower-cost funds, allowing them to expand their lending activities and compete more aggressively with lending rates.
2. Improve monetary policy transmission—With more competition for deposits, banks will have greater incentives to pass on lower interest rates to borrowers, ensuring that central bank rate cuts actually benefit the public.
3. Encourage fairer banking practices—Breaking the dominance of a few banks will create a more balanced, consumer-friendly financial sector.
The PNP Spokesman noted that since August 2024, the BOJ has consecutively lowered its rate by a total of 100 basis points (1%), bringing it to 6%. However, despite this clear signal from the central bank, consumers have seen virtually no movement from commercial banks in reducing lending rates where they can.
According to Robinson, “this highlights a serious problem with Jamaica’s monetary transmission mechanism. Madam Speaker, we have heard repeated calls for commercial banks to lower their interest rates from the Minister of Finance, the Minister of Investment, the MSME Alliance, and myself—yet the banks have refused to act.”