BoG worried about banks high lending rates – Second Deputy Governor

The Bank of Ghana (BoG) says it is worried about the relatively high lending rates banks continue to charge their customers.

“We remain concerned about the relatively high lending rates that banks continue to charge their customers, with spreads over and above the Ghana Reference Rate and very high fees, commissions and other costs imposed on customers which lead to the exclusion of many small and medium-businesses. As a nation, we lose significant opportunities to grow strong viable brands that can compete with businesses across the African market and beyond if we do not provide mechanisms for financing our small businesses on a consistent and sustainable basis,” Mrs Elsie Addo Awadzi, the Second Deputy Governor of the BoG stated this at the 25th Dinner Dance of FBN Bank in Accra at the weekend.

The practice, she said, led to the exclusion of many small and medium-sized businesses out of the credit market and by extension, impedes their survival and growth.

The Second Deputy Governor encouraged banks to continue in their efforts to support a strong recovery of the Ghanaian economy.

In this regard, Mrs Awadzi entreated banks to significantly increase credit to the private sector, and to offer reasonable and affordable interest rates to their customers.

The Second Deputy Governor stressed that banks should deploy technology and strategic partnerships to promote access to finance for all segments of the economy through innovative products, services, and delivery channels.

“Our youth population, women entrepreneurs, persons who are differently-abled, persons displaced by migration or extreme weather patterns or pollution of our water bodies and farm lands, are all viable customer bases waiting to be nurtured so that they can fully participate in helping to build a more resilient economy,” she said.

The Second Deputy Governor encouraged banks to do more in the area of financing the transition to a greener and more sustainable economy, guided by the Sustainable Banking Principles launched in November 2019 by the Bank of Ghana, the Ghana Association of Bankers, and the Environmental Protection Agency.

Mrs Awadzi observed that with the reforms undertaken by the BoG in recent years, and policy and regulatory reliefs announced at the onset of the COVID-19 pandemic, the banking sector was well-positioned to withstand the economic shock fairly well.

She said the banks had played a critical role of helping to mute the effects of the pandemic on the real sector by restructuring loans and suspending loan repayments for customers who were negatively impacted by the pandemic.

Mrs Awadzi further said the banks provided new loans in the total amount of GHC 27,850,500,963.01 from March to December 2020 to sectors of the economy like the pharmaceuticals industry, the textiles and garments industry that were critical in helping to fight the pandemic and accelerate economic recovery.

 “The banking sector’s performance in 2021 to date has remained strong with sustained growth in total assets, deposits, loans, investments, and income, although credit risk remains a concern, which the Bank of Ghana continues to monitor closely as the pandemic rages on,” Second Deputy Governor, said.

STORIES: KINGSLEY ASARE

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