Banks challenged to reduce lending rates

In solwezi

THE Bank of Zambia (BoZ) has challenged commercial banks to reduce lending rates and service charges.

The charges which have remained relatively high and therefore counterproductive to the financial inclusion agenda.

This follows the recent reduction of the policy rate and the reserve ratio by 75 and 150 basis points, respectively aimed at providing cheap credit for the private sector.

BoZ governor, Denny Kalyalya, observed that although some commercial banks had reduced the lending rates, the percentages were not in tandem with recent policy measures such as reduction in the policy and reserve ratio rates.

"As we have stated before, your customers, especially the SMEs need access to affordable financial services and funds to finance their investment activities, which in the final analysis will be beneficial to the lending institutions themselves in terms of growing and sustaining their business.

"The intermediation role of the banking sector in providing finances is defeated if banking costs remain high as they create an uncalled for barrier between lenders and borrowers. While the Bank of Zambia has recently undertaken Monetary Policy measures, most of which are intended to lower the cost of borrowing," he said.

The governor was speaking yesterday when he officially opened a 25th branch and the second one in North Western Province for First National Bank (FNB) Zambia in Kalumbila.

Dr. Kalyalya also said BoZ expected commercial banks to price the electronic payment services and products in an affordable manner following the revision of the Item Value Limits (IVL) meant to increase usage of such payments.

He further said the Central Bank also expected banks to develop specific risk management policies to mitigate cybercrime which was hindering the usage of electronic payment platform. And the governor commended FNB Zambia for opening a branch in Kalumbila because it was one of the fastest growing new districts.

Meanwhile, FNB Zambia chief executive officer, Leonard Haynes, said Zambia was a key investment destination for the First Rand Group.

Mr. Haynes also said the opening of the Kalumbila branch would allow the Bank to support key sectors of the economy.

"As one of the most innovative banks in the country, we have leading customer value proposition for the retail, Small and Medium Enterprises and Agriculture sectors of the country.