THE Consumer Council of Fiji has hit back at the Association of Banks in Fiji's (ABIF) recent outburst that Fiji was becoming 'over-banked'.
And the council was not surprised at the announcement made by HFC that the Reserve Bank of Fiji had issued a provincial licence to operate as a commercial bank.
Council chief executive officer Premila Kumar said ABIF's former president Kevin McCarthy indicated the end result of having six banks would lead to degradation in the quality of banking services over time as returns in the industry were reduced to very low levels.
"The council believes the entrance of another bank in the market undoubtedly will provide more choices for consumers," Mrs Kumar said.
She said the presence of six banks would not only stimulate competition but it would force the service provider to deliver high quality services at a lower rate to retain its customers.
In many aspects, she said competition would bring better efficiency and welfare gains for consumers as seen with the entry of BRED Bank.
"Consumers in Fiji are now experiencing true competition with the opening of BRED Bank which made the other four banks reduce their interest rate on home loans including the reduction and removal of other fees and charges which benefit consumers immensely," she said.
"The council understands why the four established banks do not wish to see new players in the market."
She said those banks feared that as the number of competitors in the market increased, the bank's pool of borrowers would decline which would reduce its bottom line.