Universal banks in the country have reduced the interest on both existing loans and those yet to be sanctioned by 200 basis points—2percent—in a raft of measures to mitigate the harsh grasp of the coronavirus pandemic on individuals and businesses.
The Ghana Association of Bankers (GAB) in a statement detailing banks’ response to the virus scourge on the public, indicated that the reduction in the cost of credit extends beyond the duration of the pandemic to allow borrowers to recuperate from the pandemic.
“Banks agree to a general 200 basis points interest rate cut on all existing local currency denominated loans and for all new loans to be sanctioned by member banks.
This rate cut shall cover not only the period of the pandemic but Banks recognise that it will take businesses and individuals sometime after the end of the pandemic to retool and restock to achieve the semblance of normalcy – the rate cut will therefore cover the remaining tenor of the facility,” the statement read.
It added: “As operators in the financial services industry, GAB will continue to monitor the impact of the virus on global health systems, supply chains and our general way of life and in particular; the strain on health systems in Ghana.”
The GAB further urged the general public to switch to digital banking in furtherance of governments directives to curtail the spread of Covid-19.
“Most fees on digital and other alternate banking channels have either been scrapped during this period or significantly reduced so customers do not have to make financial decisions on whether to switch to an alternate platform or not,” the statement indicated.
The rate cut comes after the Bank of Ghana in its monetary policy committee last month reduced the policy rate by 150 basis points to 14.5 percent in a bid to encourage banks to lend more to boost economic activities.
The central bank’s policy rate cut was the first in over a year and sees the rate fall to its lowest since June 2012.