Bank of Uganda grilled over high interest rates by commercial banks
Mps on the National Economy committee have grilled officials of Bank of Uganda led by the Director in charge of supervision Justine Bagyenda over looking on as commercial banks are causing businesses to close down by charging high interest rates.
Appearing before the committee chaired by Buliisa county Stephen mukitale wondered how commercial banks charge interest rate in the range of 27% which is beyond the interest rate set by bank of Uganda for commercial bank to charge from borrowers.
Mps said that the fair interest rate should have been at 15% as advised by bank of Uganda to be fair to business community.
Mps who included, padyere county mp Joshua Anywarach, Christine Acayo said that investors and business people are losing their assets they put in banks to get loans after banks increase their interest rates without first agreeing with a borrower.
MP Acayo said that the move by commercial banks to charge high interest rate is sabotaging government programmes of creating jobs for the peoples.
The Director supervision bank of Uganda Justine Bagenda said that bank of Uganda is still pressing hard to ensure that commercial banks reduce on interest rate charged from borrowers
Bagenda said that commercial banks are responding positively and are reducing their interest rates but says that central bank is concerned at a slow pace that commercial banks are moving on in reducing their rates.
She said that the changes in commercial banks do not much with the changes made by central bank the incident that she described as unfortunate.
Bagenda however said that central bank has limited powers over commercial banks since Uganda is operating under liberalized economy but says that engagements are ongoing and changes will be realized soon.
In November 2011 interest rates were at 30% in most of the commercial banks but it is now said that most banks have reduced to between 21to 23%.