BoZ urges banks to reduce costs
BoZ urges banks to reduce costsBy Mutale Kapekele
Fri 12 Nov. 2010, 04:01 CAT
Fundanga - Inflation is going down, government securities yield rates are down, in the third quarter there were at 4.7 per cent. Why should the lending rate be at 30 per cent?
COMMERCIAL banks have been challenged to enhance deposit mobilisation through innovative products that can provide credit to fuel economic growth.
And Bank of Zambia (BoZ) governor Caleb Fundanga has urged banks to reduce their operational costs for interest rates to go down.
Responding to a press query on finance minister Situmbeko Musokotwane’s challenge that banks should reduce the interest spread between savings accounts and lending rates, Bankers Association of Zambia chairperson Saviour Chibiya called for innovation among commercial banks.
“We agree with the Minister of Finance that enhancing deposit mobilisation, through more attractive pricing and introduction of other innovative products is a key ingredient to ensuring that banks have the necessary liquidity to provide credit to fuel the economic growth of the country,” Chibiya stated.
“As BAZ we are glad to see the diverse pricing structures of banks which are published by the Bank of Zambia every quarter in the newspapers, as well as the increase in products being advertised by banks. Such marketing efforts help with product awareness and gives the consumers knowledge of their options.”
Chibiya stated that BAZ was working with the government, BoZ and other stakeholders in meeting the challenge of increasing savings in the country and reducing the number of people who did not get the benefit of financial services.
And responding to questions from the press after presenting the Bank of Zambia quarterly brief for July to September on Monday, Dr Fundanga said the central bank would not rest until equilibrium was reached on interest rates.
Currently, banks are charging an average of 19 per cent on lending while paying savings accounts holders as little as 0.2 per cent as interest.
Dr Fundanga urged banks to reduce operational costs by reducing the costs of hiring managers through training of locals to take up those positions.
“Banks are saying the cost of hiring managers is very high. This has also contributed to the high interest rates,” Dr Fundanga said.
“The solution to this is to train Zambians. There are so many graduates who are unemployed. In many countries the cost of HR Human Resource is low because their train locals. The Institute of Bankers can partner with the CBU Copperbelt University to offer degree programmes in banking.”
Dr Fundanga further said inflation, which currently stands at 7.7 per cent, was going down and that interest rates should correspond with that development.
“Inflation is going down, government securities yield rates are down, in the third quarter there were at 4.7 per cent. Why should the lending rate be at 30 per cent?”
Labels: BOZ, CALEB FUNDANGA, INFLATION, LENDING RATES, SAVIOUR CHIBIYA
posted by MrK @ 8:34 AM
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