Industries will be better off if Bank of Ghana place a cap beyond which banks should not lend, President of the Ghana Association of Bankers (GAB), Mr Alhassan Andani has stated.
According to him, “Ghana, since 1983 has been moving away from a controlled pricing regime and I am not sure we want to get there again,” he said, citing the Wold Bank funded programme in the 1980s, FINSAP that was meant to introduce competition into the financial sector.
GAB’s position on the capping of interest rates, he indicated, was at variance with the likes of the Association of Ghana Industries (AGI) which have long argued that banks needed extra pressure beyond market conditions to lower the cost of lending.
Briefing the media in Accra, the President, added that, attempts to cap rates would also be disingenuous to the banking sector.
After emerging from a regulated pricing regime in the 1980s, the banks said the country had come to the realisation that regulating the amount at which banks lend to their customers was disastrous hence the need to allow market conditions to continue to determine the cost of credit.
As a free market, the STANBIC Bank MD also indicated that, “banks should be allowed the free will to determine their respective interest rates based in their cost of funds, among other market conditions”.
He was, however, optimistic that lending rates will begin to ease as stability returns to the economy.
Declining interest rates should help inspire the private sector to borrow more for expansion and retooling, which will lead to increased total economic output, measured by gross domestic product (GDP).