Business
BOU targets commercial banks over high interest rates
Publish Date: May 13, 2014
BOU targets commercial banks over high interest rates
Bank of Uganda wants financial institutions to reduce the cost of loanable funds.
  • mail
  • img
newvision

By John Odyek

COMMERCIAL banks in Uganda are not heeding to Bank of Uganda’s call to reduce interest rates and lend more to the private sector. High interest rates have put off many borrowers in Uganda.

Bank of Uganda reports state that there has been only a modest increase in the stock of private sector credit. 

It said the level of private sector credit at the end of December 2013 was sh8.62 trillion, which is about 8% higher than the June 2013 levels.

The ministry of finance states that in spite of a reduction in both inflation and the Bank of Uganda policy rate, lending rates charged by commercial banks continue to be prohibitively high and are keeping borrowers away from the credit markets.

“We will continue to work with financial institutions to reduce the cost of loanable funds, by reducing the cost of doing business. There are a number of reforms that are expected to have a positive impact on financial sector,” finance minister Maria Kiwanuka said.

These include amendments to the Financial Institutions Act to introduce Islamic banking, fast tracking of the national identity card project which will make it easy for banks to track clients and more difficult for borrowers to default, financial literacy campaigns which are aimed at empowering borrowers to make rational decisions, the liberalization of the pension sector which will improve liquidity in credit markets.

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
EADB to fund more projects in Uganda
The East African Development Bank (EADB) has received credit worth $40m (about sh104b) from the African Development Bank (AfDB) to finance infrastructure, manufacturing, tourism, agriculture, transport, education and health projects...
Quacks in construction industry a big threat to Vision 2040
Players in the construction industry have asked the Government to regulate it, saying increasing numbers of quacks will affect efforts to attain the Uganda Vision 2040....
NSSF to save Uganda Clays from collapse
It is now or never for Uganda Clays Limited (UCL). The National Social Security Fund (NSSF) has announced that it will convert a sh16.7b loan to UCL into equity in a bid to secure the company’s future....
UAE Exchange Uganda celebrates, brand turns 34 globally
UAE Exchange Uganda joins its global family in celebrating the 34th anniversary of the brand coming into existence...
Former health ministry accountant to go on trial over illicit enrichment
The Constitutional Court has ruled that the prosecution of former principal accountant, Ministry of Health, Nestor Machumbi Gasasira, should proceed in the Anti-Corruption Division of the High Court....
Martin Aliker is new NIC chief
Dr. Martin Aliker, the senior presidential adviser on special duties, has been appointed the acting chairman of the National Insurance Corporation, following the death of the chairman, Dr. Remi Olowude, last month....
Should diplomatic passports issued to ex-govt workers be with drawn?
Yes
No
Can't Say
follow us
subscribe to our news letter