Reduce lending rates, Mutebile tells banks
What you need to know:
Weighted average rate currently stands at 22 per cent.
Banks across the country have been asked to align their lending rates with the Central Bank rate (CBR).
The call by Bank of Uganda Governor Emmanuel Tumusime Mutebile, was made during the official launch of Guaranty Trust Bank (Uganda) Ltd on Monday.
Currently, the CBR at which commercial banks borrow money from the Central Bank stands at 11.5 per cent. The weighted average lending rate in the commercial banks currently stands at above 22 per cent.
“Bank of Uganda is committed to forcing price stability and ensuring sound financing system. I therefore ask banks to align charges in lending rates to the Central Bank Rate (CBR). These rates are still high and they must come down,” Mr Mutebile said.
He advised the bank to offer products that cannot be offered by others.
“Your entrance into the market will increase competition. But in order for you to expand your market share, you need to curve out a variable niche, offering products that are different from other players,” Mr Mutebile advised.
GTBank’s entry into the market follows the acquisition of a 70 per cent stake in Fina Bank Group for about Shs250 billion. This brings the total number of commercial banks in operation in the country to 26.
The merger will provide GTBank with an attractive foothold in Kenya, Rwanda and Uganda. The bank will over the next two months integrate Fina Bank Group into the Guaranty Trust Bank Group.