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High lending rates: Bankers Association kicks against capping interest rates

The Ghana Association of Bankers kicked has against any proposition for the Bank of Ghana to cover loan fees in the nation, saying, it would be counterproductive and could bring about potentially negative side-effects.


As per its Chief Executive, John Awuah, loaning rates must be controlled by market essentials and not power guideline.


The Institute of Economic Affairs has made an idea for the Bank of Ghana to consider covering loan fees in Ghana, to help cut down cost of credit.


In any case, Mr. Awuah deviates, saying, "any ideas or any conversations of covering loan costs ought to be of a worry since it has a likelihood or inclination to be counterproductive and can truly bring about potentially negative side-effects".


"You can locate the model that we have found in Africa where Kenya after three fruitless efforts to present financing costs cap, it at long last presented covers on loan fees in 2016, just to make a U-turn in 2019 returning to unregulated economy deciding loaning rates. You can't flee from market essentials", he clarified.


To him "as a country, we should all mobilize behind strategy producers in their endeavors towards a transition to bring down market revenue system. Also, banks won't have anything to do than to go with the same pattern as we have done."


Over the most recent five years, loaning rates have streamed from the normal of 29% to about 20.5%.


Mr. Awuah said "I figure the conversation ought to be on what would we be able to accomplish more with regards to what we've done in the last three or four years that has brought about market rates descending, arrangement rate moving downwards, T bills moving downwards, and the wide range of various rates have stuck to this same pattern. Loaning rates is one of the rates and consequently that will likewise follow."


Cost of credits fall further, as normal loaning rate fixed at 20.61% – BoG


Cost of advances keep on falling yet barely, as normal loaning rate remained at 20.61% per annum in June this year.This is identical to 1.72% premium on advances each month.


Nonetheless, the normal loaning rate changes among the banks and the separate areas.


For example, a few banks will offer credits as low as 17% per annum, while others charge rates as high as 27%. By and large, it will rely upon the danger profile of the clients.


Likewise, loaning to the agribusiness area is considered more hazardous than the assembling area, and subsequently credit to the horticulture area will be higher.


As indicated by information from the Bank of Ghana, normal loaning rate varied in the primary quarter of the year, yet has since withdrawn.

Content created and supplied by: Lenny (via Opera News )

Awuah Bankers Association Ghana Association of Bankers Institute of Economic Affairs John Awuah

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