Don’t cap interest rates - Premium Bank MD

The Managing Director of Premium Bank, Mr Kwasi Tumi, has rejected calls for government to cap interest rates, warning that the move would be counterproductive.

He likened capping interest rates to covering boiling water, saying it would eventually overflow.

He was answering questions at a short media briefing to announce the official commencement of business by Premium Bank.

The Association of Ghana Industries (AGI) has requested that the Bank of Ghana (BoG) to direct commercial banks not to lend to businesses above a stipulated threshold but bankers and some economics have disagreed.

City Investments Company Limited has now been rebranded as Premium Bank following the granting of a universal licence by the Bank of Ghana (BoG).

City Investments Company Limited was incorporated as a private limited liability company under The Companies Code, 1963 (Act 179) on 12 November, 1992, originally as Vanguard Investments Limited and subsequently licensed by the Bank of Ghana on 18 April, 1995, to operate as a Finance House.

Mr Tumi noted that interest rates is a price and, therefore, the free market economics tenets should be allowed for items of prices to find their own level.

He expressed the assurance that the bank was prepared to meet the new minimum capital requirement that the Bank of Ghana plans to implement next year.

He noted that banks must be equipped to operate effectively and, therefore, supports the idea of economic capital for banks.

On high interest rates, Mr Tumi stated that it would continue to rise until the economic environment improves saying the managers of the economy should fix the challenges.

He said as Small and Medium Enterprises (SME) bank, management’s focus is to offer products suitable for SME.

He said the bank was ready to make significant inroads in the sector despite the stiff competition in the sector.

He was optimistic that the bank’s experience in the industry should enable it to meet the competition.  

He stated that Premium Bank embraces mobile money and would continue to use it to make transactions easy for its clients.

The Deputy Managing Director of the Bank, Jacqueline Benyah, explained the banks hopes to leverage on the over 20 years of experience in serving the traders, small firms, importers and SMEs to match competition.

She explained that operating as a universal bank would enable them to provide full banking services to their clients which the bank could not do when it was Finance House under the name City Investments Company Limited.

The bank, which currently has two branches - comprising the Head office in Accra and another branch in Takoradi - plans to increase branch networks to eight in one year.

The six new branches will be established as follows: Accra- 2, Tema-1, Kumasi-2, and Tarkwa-1.