Banks
Papua New Guinea’s banking sector consists of four commercial banks and various other licensed financial institutions and credit unions. In 2002 the former Papua New Guinea Banking Corporation merged with Bank South Pacific Ltd, making it the largest bank in the country. The other large commercial banks are Westpac (PNG) Ltd, ANZ (PNG) Ltd and Maybank (PNG) Ltd, all of which function as subsidiaries of international banks. In 2012 there were 22 registered Savings and Loans companies in the country and ten other non-bank financial institutions including investment and microfinance companies.
Regulation of Financial Services
The Bank of Papua New Guinea is the supervisor and regulator of the banking system. Both commercial banks and non-bank financial institutions are licensed under the Banks and Financial Institutional Act (BFIA) of 2000. The Bank of Papua New Guinea also licences savings and loan societies under the Savings and Loan Societies (Amendment) Act (1995). The Port Moresby Clearing House is used by the government and regulated under the Record of Arrangement Between Banks (RABB).
Development of Financial Services
The World Bank’s Ease of Doing Business Index (2011) reports that Papua New Guinea ranks 15th out of 24 countries in East Asia and the Pacific. The country also ranks moderately when it comes to getting credit in 14th position. With regards to protecting investors Papua New Guinea is strong coming 7th of the group. The National Development Bank was established in 2007 by an Act of Parliament to provide accessible development credit to the country’s citizens, especially to those in rural areas where over 80% of the population live. Although there has been some development in electronic payment systems such as eftpos ( electronic funds transfer at point of sale) much of the country’s payment system is still cash based. Cheques and cash remain the two main methods of payment, especially within the rural community whereas the urban community uses more developed means of payment. Direct transfers of salaries into employees’ banks accounts from both the government and private enterprises, however has caused a decline in the use of cheques.
