Mutebile cautions commercial banks against capping of interest rates

By Samuel Ssebuliba:

The governor Bank of Uganda Prof Emanuel Tumusiime Mutebile has cautioned commercial banks against capping of interest rates, rather advising that they embrace various strategies of reducing their operation costs.

Currently the annual operation costs of banks stands at 11% which makes the final interest rate extremely high.

Speaking during the Annual Bankers’ Conference in Kampala Mutebile noted that although the annual demand for loans is growing at 17%, only 70% of these loans are approved due to skepticism within the banking sector.

Mutebile thus says bankers must embrace swift measures to cut operation costs including reducing on workers, new financial innovation, popularizing use of ATMs and other cost cutting means.

According to the Central Bank, the average interest rate currently stands at 20%.