RBC insists that the recent foreign exchange limits announced for its credit cards are necessary in the face of a steady increase in foreign currency transactions with no corresponding increase in supply.
The Canadian-based bank said, like any financial institution, it regularly reviews the forex limits on clients’ credit cards and realised it would have to implement limits effective December 1.
In response to questions from Guardian Media, RBC said, “We understand this situation may cause inconvenience, and we deeply empathise with our clients who rely on foreign currency for their personal and business needs. We also recognise the holiday months are a time when many people have the greatest need for foreign exchange, but these adjustments are necessary.”
On Friday, RBC announced that credit card holders will see their monthly limit reduced from $41,000 to $14,000 in forex equivalent. This represents a 66 per cent decrease.
Weighing on the issue, Greater Tunapuna Chamber of Industry and Commerce President Ramon Gregorio said small and medium-sized businesses will feel the brunt of the credit card cuts.
“We have small and medium-sized businesses in our Chamber who import products, import their goods and raw materials for their business processes and this will further hinder their ability to be competitive and they will now have to seek alternative sources or alternative markets to be able to satisfy the demand in the local market,” he explained.
Tobago Business Chamber chairman Martin George reiterated his call for an immediate and unconditional repeal of the Foreign Investment Act as a direct measure to ease the forex crisis.
George said the Chamber had been championing this appeal for many years as the “repressive and obstructive legislation” represents a “palpable absurdity,” especially in the face of the severe scarcity of foreign exchange.
“It has crippled all direct foreign investment in Tobago. While you have other small Islands up the Caribbean rolling out the red carpet, welcoming investors and promoting an investor-friendly climate, we in T&T instead are chasing away investors, putting obstacles in their way, making life as difficult as we could for them, to ensure they cannot come and invest,” he said.
“The simple fact is that the act needs to go. It needs to be repealed and expunged from our laws immediately and entirely.”
George said this would allow an inflow of much badly needed foreign exchange into Tobago, with obvious spillover benefits for the entire country.
Fyzabad Chamber of Commerce President Angie Jairam said one of the reasons for the forex crunch was the closure of the Petrotrin refinery, which had been a big earner of foreign exchange.
“The question is why did the government close down the refinery and now five years later the government cannot find a buyer?
“There has been little or no increase in the budget for agriculture and tourism, which are low-lying fruits to assist with the shortage. The SMEs will continue to be in dire straits with their businesses with this shortage of forex,” Jairam said.
RBC is the latest bank to reduce foreign exchange limits on credit cards. Scotiabank recently announced that effective December 1, holders of the Aero Mastercard Black will only be able to spend a maximum of US$5,000 a month. Personal cards have a US$2,000 limit.
Republic Bank made similar changes to its forex limits in September 2023. Their customers can access a maximum of US$5,000 per statement cycle.
On Tuesday, Minister of Finance Colm Imbert held a press conference where he said it was time to review the current honour system by which forex is distributed.
