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
BOU has no influence on govt spending
There have been allegations in the media that Bank of Uganda printed money for the 2011 elections, which led to the high inflation rate at the time....
UAE Exchange honoured at FiRe Awards 2014 in Uganda
UAE Exchange, the leading global money transfer, foreign exchange and payment solutions brand, has been honoured with the Certificate of Recognition for Outstanding achievement in Financial Reporting under Forex Bureau category in FiRe Awards 2014 in Uganda....
Pakistan to facilitate Uganda businessmen to exhibit in Karachi
A section of Ugandan business comminity is set to widen its business scope into Pakistani following new interventions to boost economic ties between the two nations....
Tourism board to use PR firms to market Uganda
The Uganda Tourism Board (UTB), the body charged with marketing the country as a tourism destination of choice, has adopted the use of foreign public relations firms to sell Uganda after traditional marketing registered minimal success....
Ministry wants local drug makers protected
The health ministry has supported the quest by local manufacturers of medicines and other health supplies to be protected from foreign competition to enhance citizens’ access to drugs....
Food experts warn hotel chefs over food poisoning
Food experts have advised chefs in the country to maintain hygiene to avoid food poisoning and scaring away potential food eaters from eating places....
Should workers be subjected to a 4% Health Insurance Tax??
Yes
No
Can't Say
follow us
subscribe to our news letter