Some Commercial Banks have given indication of a positive response to calls by the Private Sector for a further reduction in their base rates.

They have indicated their commitment to further reduce it only if certain market conditions are met.

The base rate which is the interest charged on loans from banks to their key customers has been reduced by a number of banks in response to the reduction in the Bank of Ghana’s Policy Rate from 18 percent to 16 percent.

The Ghana National Chamber of Commerce and Industry (GNCCI) however told Citi Business, this corresponding reduction by the banks is not significant enough to accelerate private sector development.

This also essentially comes ahead of CITI FM’s round table discussions on Interest rates dubbed CITI BUISNESS FOCUS scheduled for this Thursday, March 11 at Alisa Hotel, North Ridge.
 
In response, the Head of Treasury at Intercontinental Bank, Emmanuel Dabi told Citi Business, though they agree with the chamber of Commerce that there is a need for a reduction, only the results from the implementation of certain relevant initiatives would make a further reduction possible.                                   

He added that “if this works it simply means that banks would be relatively comfortable and therefore instead of fracturing in that particular rich element which is their cost of fund, they would have to reduce it and nobody would have to worry about the default rate.”

Though he would not be specific on the timelines and the margins, he said a further reduction is most likely to occur sometime in the second quarter should the market conditions continue to be that favorable.

The Managing Director of UNIBANK, Amissah Addai Owusu Amoah also told Citi Business, the high expectations from the private sector are also very likely to cause them to further reduce the rates.

Meanwhile, the Finance Minister, Dr Kwabena Duffuor is reported to have indicated government’s plans to engage the banks to deliberate on acceptable interest rate structure to the benefit of all stakeholders also towards healthy competition among the banks.

This, he reportedly said has become necessary because, although the Central Bank had reduced prime rates, cost of borrowing at the various Commercial Banks remained the same.  

He made this known in a speech read on his behalf by the Director of Budget at the Ministry, Mr. Simeon Patrick Kyei, during a Ghana Employers Association (GEA) meeting in Accra.