Lending rates killing SMEs

A Kumasi-based financial consultant has expressed disgust at the current lending rates offered by banks in the country.

Raymond Tandoh, in an interview with BUSINESS GUIDE, stated that banks in the country charge over 30 percent interest rates on loans they lend to customers, adding that the development could cripple small businesses.

He said it was unfair for financial institutions to demand over 30 percent interest on loans especially at a time when the Bank of Ghana’s (BOG) policy rate for banks was pegged at 16 percent.

According to him, the 10 percent annual credit interest rate paid by banks to customers was inadequate and should be revised upwards as soon as possible.

Mr. Tandoh, an accountant, said that banks in the country were exploiting innocent customers unjustifiably.

Calling for the BoG’s intervention to help save customers, he said the bank’s policies were ‘killing’ Small and Medium-scale Enterprises (SMEs).

He said the country’s economy was worsening because SMEs could not access credit from banks at affordable rates to employ many people.

He therefore appealed to BoG to order banks to maintain a certain margin on lending.

Mr. Tandoh was unhappy with the rate at which banks in the country were opening branches, noting that “the opening of unnecessary branches with high capital funding by the banks is not proper so it should be stopped,” he said.