BOU governor warns banks against high interest rates

Kampala, Uganda | THE INDEPENDENT | The Governor Bank of Uganda – BoU Professor Emmanuel Tumusiime-Mutebile has warned commercial banks against charging high-interest rates to loan applicants.

Professor Mutebile made the remarks on Thursday during a meeting with residents of the Rwenzori region at Kalya Courts in Fort Portal.

A section of people told Mutebile that the commercial banks keep the interest rate at 20 percent which has stopped them from acquiring loans.

Mutebile was also told that some commercial banks unscrupulously increase interest rates on loans that they have already acquired without informing them.

Musa Halima, the manager Abbas Balinda transporters said that she acquired a loan at a specific interest rate, but was surprised that after a few months, the interest rate had increased, which was contrary to their agreement.

Mutebile noted that the central bank is concerned that commercial banks have turned a deaf ear to lower the interest rate.

He vowed to take punitive measures against the bank if they don’t review the interest rates basing on the Central Bank Rate – CBR, which is the benchmark lending rate for commercial banks that is currently at 10 per cent.

Mutebile also appealed to the public to embrace the use of coins.

The meeting is one of the new initiatives by Bank of Uganda, named the Town Halls, where the bank’s staff and its head, the governor, move around the country sensitizing the public about the mandate of the Central Bank.

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