BANKS' lending interest rates are descending slowly due to high money price amid poor saving culture.
The financial
institutions are accessing deposits in short term while lending tenures
are...
long thus failing to lower borrowing rates.
Tanzania Bankers'
Association (TBA) Chairperson Abdulmajid Nsekela said overall borrowing
rates were gradually coming down but blocked by some challenges
including accessing long term deposits.
"Most depositors
don't keep their money long in accounts creating a challenge of
mobilizing funds for loans," Mr Nsekela said last week when briefing
reporters on the performance of CRDB Bank in quarter three.
Mr Nsekela, who is
also the managing director of CRDB, the largest bank, said a lending-
term is between five to ten years but deposits are hardly one-year.
"This liquidity
mismatch spreads borrowing and depositing interest rate... "Since, banks
have to look for alternative way of accessing funds which is costly,"
Mr Nsekela said.
NMB Bank, for instance, recently raised money for loan through a three year retail bond at 10 per cent interest.
To lend customers,
the second largest bank, will have to add other factors on top of 10 per
cent elevating further cost of borrowing.
But there are hopes
in the horizons because bank agents 'wakala' are taking their roots in
the economy thus bringing close banking services to 'wananchi'.
"Most agents are in
a walkway distance this minimises lump sum drawing to enable depositors
to keep longer their money on accounts... this is healthy for
businesses," he said.
Mr Nsekela said for
CRDB customers lending interest rates have gone down to between 14.5
per cent and 18 per cent due to number of factors including mobilising
funds from CRDB Wakala.
"We are focusing on
the customer, and this means that we are re-engineering our products
and services to respond to the changing needs in the marketplace," he
said.
According to Bank
of Tanzania recently monthly economic report, average lending rate was
16.77 per cent this August, lower than 16.86 in the preceding month and
17.09 per cent last August.
The report partly attributed the interest fall to accommodative monetary policy pursued in last two and half years.
However, economists
urged that should everything remain equal, a larger money supply lowers
market interest rates, making it less expensive for consumers to borrow
while smaller money supplies tend to raise market interest rates,
making it pricier for consumers to take out a loan.
BoT report showed
that this August, extended broad money supply grew at an annual rate of
8.5 per cent slower than 9.0 per cent in July.
The growth was in line with projected growth of 10 per cent in the year ending next June.
No comments:
Post a Comment