Average lending rates could drop to about 10% – Ghana Association of Bankers
Chief Executive of the Ghana Association of Bankers, John Awuah has noted that average lending rates could drop significantly to hit 15 to 10 percent.
According to Mr. Awuah, this will be based on the fact that if current economic various continue to decline as we have seen over the years.
The Chief Executive disclosed this host George Wiafe when he appeared on PM Express Business Edition on the topic ‘Bank Charges and Service Delivery in Ghana’ on 9 September 2021.
His response comes on the back of calls for interest rates reduction.
But Mr. Awuah maintained that the banks are “ever” committed to reducing interest rates.
He maintained as long as the economic situation and variables improve, rates will drop automatically.
“We have seen rates dropped from over 30% some years ago to average 20% when the situation did improve,” he said on JoyNews.
“And I can assure you it could go down further. “We are never excited when interest rates are high because it hurts our businesses too,” Mr. Awuah noted.
This is why we are all working together, with the relevant regulators to drive down the cost of credit.
Businesses benefiting interest rates reduction
The Chief Executive of the Ghana Association of Bank is also making a strong case for businesses to respond to these rate cuts, in terms of reducing the cost of their products and services. Mr. Awuah argues this might be one of the surest ways that the reduction in interest rates by banks will be felt by all sectors of the economy.
Rising Non-Performing loans and role of the judiciary
Non-Performing Loans continue to hit levels which many have described as worrying. But of Ghana put the total industry value ending June at around 8 billion cedis.
A development that has been compounded by COVID-19 which has made difficult for most businesses to honor their loan because of the negative impact of the pandemic on their operations.
But speaking on PM Express, Mr. Awuah noted that the Judiciary has not been that helpful when it comes to checking high loan default rates in the country.
“We need to let borrowers understand that when they default there are consequences and I think that the judiciary is not helping in this area” he added.
Mr. Awuah noted that “there have been a lot of instances where banks have secured Judgment and later someone pops up that the property belongs to them and the court grants their request by freezing enforcement”
“We don’t think that enough has been done deal and check persons that default on loans”
“I will put the current judiciary support at around 30 percent in terms of assistance” the Chief Executive of the Ghana Association of Bankers noted.
Complying with recent Bank of Ghana’s directive
The Chief Executive of the Ghana Association of Bankers noted that as far as he is concerned his members have complied with the recent directive on some charges that are deemed to be illegal.
But on the question of capping charges, Mr. Awuah noted that apart from regulation that seeks to check illegal charges, commercial banks should be left to allow the forces of demand and supply to guide these charges.
Source: Ghana News
