Financial institutions have heeded to Governor’s call and agreed to review their lending rates.

Commercial Banks have for years defied Central Bank Rate (CBR) and set their own interest rates much higher than those set by the Central Bank.

However, at the beginning of this week, the Bank of Uganda Governor Prof Emmanuel Tumusiime Mutebile threatened to cap the lending rates.

At the monthly meeting of Chief Executives of financial institutions held on Friday 10th July 2020 under the auspices of Uganda Bankers Association (UBA), members agreed to review interest rates downwards within the next 30 days as part of the efforts stem effects of the economic stress caused by the outbreak of COVID-19 pandemic.

The UBA chairman Mathias Katamba said financial institutions are the main arteries through which monetary policy is transmitted and in challenging times like these, the members of UBA wish to convey their unwavering commitment to d whatever is possible within their means and circumstances to support initiatives by Bank of Uganda to stimulate economic activity.

“We agreed that each and every individual member institution goes back and review their internal position and adjust their lending rates accordingly based on what they can accommodate since institutions differ in composition and makeup of their cost structures, assets and liabilities,” he said.

The Executive Director of Uganda Bankers Association Wilbrod Owor said between March and May 2020, the lockdown was in effect and financial institutions completely waved off fees for bank to wallet transactions as well as for transactions below 50,000 shillings at UBA members individually and collectively and also mobilised to support towards the fight against COVID-19 in cash and in kind.

“The industry with guidance from Bank of Uganda is currently undertaking loan restructures for qualifying borrowers as part of the efforts to address cash flow challenges occasioned by interruptions to f supply chains and overall business stress,” said Owor in a statement.

Meanwhile, the meeting also agreed to separately engage Bank of Uganda and Government through Ministry of Finance on specific and urgent pain points the industry is faced with that are severely constraining their operational efficiency, expose them to risk and have a bearing to loan pricing and other tariff structures.