Managing Director of GCB Bank Limited Simon Dornoo has stated that the bank will not increase its lending rates despite the 100 basis points increase in the Bank of Ghana’s policy rate.
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) in May, 2015 increased the policy rate by 100 basis point from 21 percent to 22 percent.
The BoG attributed the increase to inflationary and exchange rate trends. Currently GCB’s base rate is pegged at 22.10% per annum while rates within the banking industry are hovering between 25- 35 percent on the average.
According to Mr Dornoo, there will be no need to increase the bank’s base rate.
“I think that policy rate was expected and banks have already reflected that in their rates. I therefore don’t see that change in our base rates as a result of the 100 basis points increase in the policy rate.”
He indicated that the increase in the policy rate was long overdue because most banks envisaged that was going to happen.
The central bank actually lends to banks at a reverse repo window of 25%, and before the increase the central bank was lending to banks at 24% so banks have naturally taken that into account in pricing their accounts but GCB in our quest to remain competitive we are going to retain our base rate at where it is for now’. He added
War on interest rates
Ghana has one of the highest lending rates in the world.
The high rates has been identified as a disincentive for the business community.
Average lending rate of banks in the country hovers around 30% while that of microfinance institutions is around 70%.
Trades and Industry Minister Dr Ekow Spio Gabrah in a bid to deal with the matter last year commenced a campaign to push the rates down.
Earlier he tasked business operators in the country to hit the streets to get banks to reduce the high interest rates.
Some bankers have however criticized his approach.
According to them government must rather deal with the numerous factors including inflation, monetary policy rate, its increasing appetite to borrow which they believe are pushing interest rates high.
Credit: citifmonline