Indigenous Banking: A New Niche

Introduction

As First Nations continue to settle outstanding grievances with the federal government, and enter into lucrative revenue sharing agreements, the fast-emerging niche of Indigenous or Aboriginal banking has become an incredibly competitive segment of business for Canadian financial institutions. Demographically, First Nations people are the youngest and fastest growing segment of the Canadian population; they are entrepreneurial and eager to grasp economic activity. Indigenous communities are in increasing need of loans to fund infrastructure projects, to participate in resource development and other investment opportunities. This trend is likely to continue and accelerate as First Nations communities move to become more active participants in Canada's economy.

Canadian financial institutions continue to partner with and lend to Indigenous communities, but are faced with a number of legal and administrative barriers when lending to First Nations. The Indian Act, R.S.C., 1985, c. 1-5 ("Indian Act") creates a unique legislative framework that governs security interests and the personal property of Indians1 on reserves. As a result of these outmoded and paternalistic provisions, First Nation communities have had to grapple with a lack of...