STANDARD Chartered Bank has reduced its Kwacha base-lending rate from 24 per cent to 21 per cent with effect from next month because of stability in the economy.
Standard Chartered Bank managing director ,Mizinga Melu said the reduction in the base-lending rate by three per cent was a result of the drop in the level of inflation and other economic benchmarks.
Another bank, Invest Trust Bank, also reduced its rate by a similar margin recently.
Ms Melu, who is vice-chairperson for the Bankers’ Association of Zambia, called on other financial institutions to review their base-lending rates downwards to support economic growth.
Last month, President Rupiah Banda, at the official launch of the First National Bank (FNB) in Lusaka, asked commercial banks to bring down loan interest rates because the current harsh lending conditions were responsible for the poor loan recovery rates and were eroding confidence in the banking sector.
The president said there was equally a risk of discouraging both savings and investments due to ironically low rates on deposits.
Mr Banda added that there was need for financial houses to bring down the high loan interest rates and other bank charges, which had made loan repayments exorbitant.
The rates for other banks are Barclays Bank at 25 per cent, First Alliance (23 per cent), Investrust (22 per cent) and Eco-bank (19 per cent).
Ms Melu said from January this year, the Government had managed to reduce inflation rate from 16 per cent to the current level of 12.3 per cent.
“We recognise the efforts and progress from the Government, through the Bank of Zambia, in reducing the level of inflation in the country. Inflation has reduced from a high of 16 per cent in January 2009 to the current level of 12.3 per cent,” she said.
Ms Melu said there had been consistent reduction in the benchmark market rates such as the three months’ Treasury Bill rate which had dropped in the last two months.
She said Treasury Bills in the last two months had on average dropped between four per cent and six per cent.
Ms Melu said the bank was committed to assisting the customers in growing their businesses.
She said as a partner in national development, the bank realised that the benefits from reduced benchmark rates needed to be passed on to the productive sectors to increase economic activity and create more jobs.
“We, therefore, believe that with the reduction in the cost of finance, our customers will continue to grow their businesses and create more wealth for the nation,” she said.
While the severity of the global financial crisis had been unprecedented, the Bank of Zambia (BoZ), financial institutions and other stakeholders played an active role in facilitating the development of the financial markets in order to improve their efficiency and effectiveness.
She said the introduction of an overnight lending facility for commercial banks by BoZ with effect from next month would contribute to improved liquidity management for financial institutions.
Ms Melu said the introduction of a wholesale lending rate by BoZ next year would further contribute to the reduction of lending rates in the market and, consequently, the productive sectors of the economy could be able to borrow at lower rates.
Ms Melu said the bank was confident of the resilience of the Zambian economy and still recognised that right across the continent, the economic environment would continue to be challenging going into next year.
“We are seeing ‘green shoots’ in the Zambian economy led by increased productivity in the mining sector,” she said.
Meanwhile, head of asset and liabilities management for global market dealing, Kabwe Mwaba said the dollar base-lending rate had been fairly stable in the last six months.
[Times of Zambia]
#1 firsti let me read
That is still an exorbitant rate, and people wonder why Zambians in the diaspora are reluctant to invest. It’s a ridiculously high interest rate
#2 This rate is calculated according to the current economic conditions with respect to inflation and many economic patterns,you dont expect Zambian banks to have the same lending rates as those in developed countries or diaspora as you call it,even people with rates of up to 12% still complain,what more a 3rd world country like Zed
lending excludes inflation rates. Number 3, I don’t expect lending rates to be the same, I expect it to be better, banks should be thinking of micro loans to develop small bussness as its primary objective, not blood suck local investors and business. This encouraging more Zambians to live in Diaspora.
As well usual Zambians #2 & 4 will always try to put a negative spin on any good news coming from the country. Yes the rates are still high but they are coming down which is good isn’t it ? Inflation has also come down which means that people should have ‘more money in their pockets’.
” STANDARD Chartered Bank has reduced its Kwacha base-lending rate from 24 per cent to 21 per cent with effect from next month because of stability in the economy. ”
Wow. That’s still usury. The problem is that THE BANKS ARE NOT LENDING.
Actually banks do take into account inflation when lending. If you take real interest rates for example, inflation is an essential component when calculating real interest rates.
The low lending rates shows that the banking industry have confidence in the economy. More confidence from sensitive industries like the banking industry is a good sign.
It is surprisig that sceptics can find a problem with reduced interest rates. Come on this positive. Stop being arm chair critics whosee traces of blood in every statement, such scepticism actually displays a very chronic form of mental disorder. And to surport Mr. Capitalist, Banks do take into account inflation, that is simple logic. Thebank lends to you so that they can get a return that will have value than the amount lent out .
I comment the bank, and also Ms Melu.
“She said as a partner in national development, the bank realised that the benefits from reduced benchmark rates needed to be passed on to the productive sectors to increase economic activity and create more jobs.”
I would like to believe that Zambia has benefited by having a Zambian woman at this bank. She has a mother’s heart for Zambia. Foreign bank bosses and men bank bosses may not have pushed for this reduction in interest rates. We men are perhaps more interested in bank bonuses to line up our pockets with cash. Wicked men. Go Ms Melu. You are our hero. Zambia Loves you.
Mr. Capitalist, ” Actually banks do take into account inflation when lending. If you take real interest rates for example, inflation is an essential component when calculating real interest rates. ”
However, the lending rates even at 21% are much higher than the official rate of inflation.
And from the standpoint of businesses, the lending rate must be lower than the rate of return. In other words, what investment could an ordinary business make that would yield a return greater than 21% per year?
This is why the usual complaint of ‘no one has any money’ comes from.
These same banks still slap a lot of charges on savings. With such high interest associated with lending rates, one would think that savings would also get a reasonable interest rate at least higher than inflation rate. Alas, they take it all away in all sorts of charges they’re allowed to dream up any time. It is no wonder banking industry is booming in Zambia. Commercial banks are eating with both hands.!
Apart from sheer crookedness, this is why most Indian business people don’t bank their money!! Its a useless affair and free money for the so called financial institutions. They are just dignified kaloba traders. Thats why I don’t bank my money, whenever we scrounge. But try Xapit tho, its cheap(er). At least you get services than ifima stupid banks fimbi. Stupid high balances as if Zambians can afford to keep such huge amounts for the bastards to give to others at very rates!! In fact, they make doubly from your money: THEY CHARGE YOU FOR USING YOUR MONEY AND MAKE MORE OUT OF IT. Stupid
LT is s.t. u.p.i.d a censored word? its like telling someone they made a mistake. anyway
1. Very dull; insensible; senseless; wanting in understanding; heavy; sluggish; in a state of stupor; — said of persons. [1913 Webster]
2. Resulting from, or evincing, stupidity; formed without skill or genius; dull; heavy; — said of things. [1913 Webster]
imwe please 20% rate is good where on earth. This too much, how can one borrow to run a business with an interest rate of this kind?