Members of Parliament have expressed concerns over high interest rates in the country and have appealed to government to establish a Financial Service Authority to be responsible for safeguarding and ensuring fair interest of financial services for consumers within the financial sector.
The legislators who were contributing to a statement on high interest rates by Nana Yaw Ofori-Kuragu, MP for Bosome-Freho, criticized the banking industry for their high interest rates in the face of a reducing inflation of 9.02 percent in April to 8.90 per cent in June this year.
They describe the issue as a national problem and directed the Finance Committee of Parliament to engage banks over their (banks) high interest rates and make appropriate recommendations on the way forward.
Earlier in his statement, Nana Yaw Ofori-Kuragu, stressed the need for banks to reduce their cost of operations in terms of salaries, the cost of premises, utilities, allowances, commitment fees and introduce more products that will replace the excessive use of cash.
He argued that considering the Bank of Ghana’s current base rate of 13 percent, average interest rate of commercial banks should not be hovering around 25 percent and in some cases even higher, adding that the phenomenon means that whilst the commercial banks are making unusually monumental profits, small scale businesses who borrow money from the banks are struggling to survive.
Nana Ofori-Kuragu, who is also a member of the Finance Committee called on government to assist the banks with more credible credit rating systems, complete the national identification registration and the street naming exercise in order to minimise the risks associated with lending.
Moses Asaga, MP for Nabdam, pointed out that government has created the necessary enabling environment by reducing inflation and its budget deficit hence the need for the banks to take a second look at their interest rates.
Minority Leader Osei Kyei-Mensah Bonsu, also noted that if interest rates are overly high, the country’s industry will remain stagnant, adding that the phenomenon accounts for the slow growth in agriculture and industry
Speaker of Parliament, Justice Bamford Addo, in a ruling said the trend must not be allowed to continue and referred the matter to the Finance Committee for appropriate recommendations on the way forward within a month.