Banker supports low rates

August 27, 2009
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, NAIROBI, Kenya Aug 27- Kenyan bankers say lowering bank interest rates is economically viable in the current Kenyan economy.

Standard Chartered Head of Consumer Banking Kariuki Ngari said on Thursday that the bank remained confident following its decision to lower lending rates by three percent.

Mr Ngari said the sustainability of low rates would however depend on how the Central Bank commits itself to maintaining steady interest rates in the market.

“If all things remain constant, I am sure it will be viable going forward because take for example government spending in infrastructure they don’t pay in advance, so we have to bridge the gap which is done by going to  the bank to borrow money,” he highlighted.

The bank lowered the cost of borrowing personal loans by 3.75 percent. At the time the bank hoped the move would help accelerate credit to people who wish to borrow but are otherwise restricted by the cost of credit.

He said the recent decision by the Monitory Policy Committee (MPC) to cut rates, should serve as an indicator that the move is sound, although many in the industry remain cautious. MPC recently slashed the Central Bank Rate (CBR) and the Cash Reserve Ratio (CRR).

Mr Ngari hopes the Committee retain the low rates for steady growth in the economy to continue.

He said the amount of lending by the bank would however be dictated by the economy, which he believes has a high demand for money to finance development projects.

 “People don’t borrow for fun. People borrow because they have a need and we believe there is need for money in the economy currently.”

Going forward the bank has identified real estate and the telecommunications industry as areas of business expansion.

“When you look at the new districts being created those are new civil servants going to be posted there with no housing for them.  I see a big opportunity in real estate.”

He was speaking during the launch of the bank’s new banking program dubbed SmartBanking which targets company employees.

SmartBanking boasts of features such as preferential pricing on personal loans mortgages, free access to mobile banking as well as e statements.

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