Interest rates dependant on savings – bankers

Five or six years ago, the phone was only limited to communication but now you can link it to your bank account and pay utility bills, so we are getting into a cash light society,”—

Ms Zimba.

COMMERCIAL banks can only reduce the current interest rates, extend funds to individuals and economic activities if they have a sufficient pool of reserves.

Bankers Association of Zambia (BAZ) public relations officer, Miriam Zimba said this, in an interview at the just-ended Zambia Agriculture and Commercial Show in Lusaka.

Ms Zimba appealed for an enhanced culture of saving among individuals for commercial banks to have a sufficient pool of funds and be able to reduce interest rates.

Interest rates are currently hovering around 25 percent. Ms Zimba emphasised that interest rates were currently high because commercial banks did not have enough pool of funds.

“The reason why interest rates are high is because we do not have the culture of saving in in this country. Our savings have been dwindling, meaning that there is little money in the banks have. In order for them to extend it, it will be done at a higher rate,” she said.

Ms Zimba said commercial banks would be able to lend money at a much lower rate if they had sufficient pool of funds.

Banks, she said, were a larger part of the community and a major player in the economy through the services they offered.

Ms Zimba assured banks would continue to promote industrial development.

She said commercial banks were keen to provide digital services which promoted a cash light economy.

“Five or six years ago, the phone was only limited to communication but now you can link it to your bank account and pay utility bills, so we are getting into a cash light society,” she said.

“We are not yet there but it is our desire as the banking sector to see more people embrace digital technology,” Ms Zimba said.