It will shave its prime rates for the fourth time this year to 21% from 22%
PIC: Bank of Uganda governor Emmanuel Mutebile predicted a 5% growth for the economy
The major commercial banks have released statements, lowering their prime lending rates, the lowest lending rates for the best customers to between 21% and 23% per annum.
These are the same levels as was witnessed in October 2011 at the height of runaway inflation.
The cut in lending rates comes after Bank of Uganda (BoU) slashed its benchmark Central Bank Rate (CBR) to 13% from 14%.
It is expected that the cut will forestall the climb in bad and doubtful loans which have hit the roof in the region of sh2 trillion.
In a statement, Stanbic Bank said it will shave its prime rates for the fourth time this year to 21% from 22% per annum from 1st December 2016 for credit facilities in Uganda Shillings. Both existing and new borrowing customers will enjoy the relief.
Relatedly, Centenary Bank also shaved their prime lending rate to 22% effective December 1, 2016. Standard Chartered Bank will move its prime rates for shilling loans to 22.5% from 24%. DFCU bank will reduce their prime lending rate to 23% effective 14th November.
While announcing the rate reduction, Patrick Mweheire, the Stanbic Bank CEO pointed out that the bank was encouraged by the news and data coming from the Central Bank which suggests the economy is recovering.
"Despite signs of the recovery, we appreciate these are still very challenging times especially for small scale businesses which constitute the bulk of the private sector and contribute immensely to GDP output. Giving them access to cheaper credit is therefore key to driving long term sustainable economic development," he said.
Bank of Uganda governor Emmanuel Mutebile recently noted that the economy is on course to grow by 5% this financial year, higher than 4.8% last financial year.