Business
Mutebile vows to punish defiant banks
Publish Date: Dec 02, 2012
newvision
  • mail
  • img

By Patrick Jaramogi

Central Bank governor Tumusiime Mutebile has warned commercial banks to lower their lending rates to levels that reflect the Central Bank Rate (CBR) or face fire.

The tough talking Governor said he would “be harsh” to what he described as ‘stubborn’ banks that charging exhorbitant interest rates.

“When inflation shot up last year we made a decision to increase lending rates. Many people made noise and shouted but this worked out. Today, the inflation has lowered to 5% and we shall keep it there for some time,” he said. He said he hoped those who were making noise had learnt some economics.

“The recovery in real growth requires real buoyance that is why the Central Bank lowered the CBR. But some banks have not reciprocated in lowering the lending rates. Banks must lower the lending rates or I will do what it takes to make sure they do so,” he warned.

Mutebile who was officiating at the launch of Diamond Trust Bank (DTB) Premium Banking at the Serena Hotel in Kampala on Tuesday.

He said businesses fear to take out loans and as a result are performing below their potential leading to the economy to struggle to grow.

“I will now be harsh. You have me and you can’t do anything about it. Be ready to see my wrath,” he said.

He hailed DTB for the excellent stewardship of the bank.

“This bank has been able to expand from one branch in 2005 to 25 to-date. They have doubled their assets and increased their deposit base in the last four years,” he said.

DTB group chairman Abdul Samji said with the opening of the Premium Banking, DTB clients will have secure and eased banking facilities in all their branches.

“We have heard women complaining that their men are spending much money paying loans due to high interest rates, but as DTB, we are geared towards reducing our lending rates to boost business and the national development,” said Samji.

Mutebile said six months after he embarked on a monetary easing regime following sky rocketing inflation, business was returning to normal

A number of commercial banks have been cutting lending rates following continued appeals by the governor over high lending rates despite cuts in the CBR. The CBR has now been set at 12.5%, from 13% in October.

Mutebile pointed out that he does not expect any further reduction in inflation rates because it might have negative economic implications for Uganda.

The loans that have gone bad as a result of defaults due to the high interest rates have increased to 4.9% from 2.1% last 12 months, according to different bank figures.

Banks will face the pressure of weighing the option of either keeping interest rates a little higher to recover the loans that have gone bad, or follow the Central Bank’s call.

The food price shocks that haunted the economy throughout the second half of last year, and the weak domestic demand for goods and services, are hugely responsible for the decline in inflation, according to Bank of Uganda.

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
EAC Cooperative Societies Bill seeks to stimulate trade
The level of optimism is high among co-operatives in East Africa, in light of the ongoing East African Community (EAC) Co-operative Societies Bill 2014 being pushed to be enacted into law....
Insurance Institute pushes for public awareness
The Insurance Institute of Uganda (IIU) has kicked off a countrywide public awareness campaign, meeting traders at their places of work, a move meant to demystify insurance....
Real Estate sector players win awards
Leading local real estate online platform Lamudi.co.ug recently rewarded the top real estate dealers, agents and developers in the country who are transacting business online especially through its platform....
Good seed door for good harvest
Just like humans look for the good traits when choosing a partner for procreation, farmers should look for good seeds for better production....
Vision Group set to crown best farmers
The search for Uganda’s leading farmers is over. Winners of the Vision Group’s Best Farmers competition will be revealed today at Kampala Serena Hotel....
World
The planet's poorest nations have failed to cash in on strong economic growth due to a lack of structural reforms, says the United Nations....
Should Govt lease parts of Lake Victoria to private developers?
Its Ok
No Way
Not Sure
follow us
subscribe to our news letter