Frequently Asked Questions (FAQs)

We've Got Answers


We understand that navigating the world of finance can be complex, and our goal is to provide you with clear answers to common queries. Whether you're seeking information on banking services, regulations, or general financial practices, our FAQs section is designed to be a reliable resource for both individuals and businesses. Explore our comprehensive list of frequently asked questions to find solutions to your inquiries and gain a better understanding of the banking landscape in Trinidad and Tobago. If you can't find the answer you're looking for, feel free to reach out to us directly, and our team will be happy to assist you. At the Bankers Association of Trinidad and Tobago, we are committed to fostering financial literacy and providing the information you need to make informed decisions.

We need banks because: they provide a secure place for the accumulation of savings; they provide the wherewithal (loans) for us to purchase and invest in goods and services which we could not have afforded on our own; and, they facilitate payments, which is important for the functioning of a modern economy.

Bank profits can appear exorbitant if viewed in absolute terms. However, when considered against the large amount of assets which they manage, banks do not make unreasonable profits. In other words, profits must be related to the amount of assets that banks or any other business deploys. Viewed this way, one realizes that other businesses, say in the energy sector have far higher rates of return on their assets and which is fact necessary.

Bank profits (that is, net income after taxes and expenses) are paid to shareholders and are also utilized to upgrade technology, train staff, expand and improve products and services and expand the capital base of the enterprises.

Lending rates reflect the monetary policy rate set by the Central Bank, the risk of the enterprise that is borrowing, the cost of funds and operational costs. If these rates are high, then bank lending rates will be high. Since all of these costs and risks tend to be higher in small developing economies like Trinidad and Tobago then lending rates are relatively higher than in other countries.

Deposit rates reflect liquidity conditions, simply put, that is the amount of money in the banks. If liquidity is high, often because borrowing is weak, then interest rates tend to be lower. If the deposits which banks hold are being used up in a strong demand for loans then deposit rates will rise.

Banks contribute to economic development by promoting savings, and lending to the private sector, government and households. These in turn then invest and make purchases which drive sales, employment and general economic activity.

Banks do this both directly and indirectly. Directly, banks lend money for housing, schools, hospitals, roads etc., which constitutes the infrastructure for social development. Banks also help people to save for retirement. Indirectly, banks help businesses grow and thrive, allowing firms to employ people and pay taxes etc.

The bank incurs costs when it employs people, installs security systems and pays taxes etc. in order to keep the money and other assets of depositors safe. In order that it meets these costs it must charge fees.

Interest rate spread reflects the risk that the bank might not get back its funds. They also include the cost of deposits and cost of operations. These risks and costs are different for different countries. When all of this is considered in the context of Trinidad and Tobago then spreads are not high but just about where they can be expected to be.