Lending rates of finance and leasing companies:
CB expects further reductions
The Central Bank (CB) has been easing its monetary policy since the
beginning of 2009 in view of the rapid deceleration in inflation, to
provide a stimulus to economic activities.
In response, money market interest rates have fallen gradually and
Treasury bills yield rates have declined by over 900 basis points so far
this year. Similar declines have been observed in other short-term
interest rates as well.
In line with such declines, banks' deposit and lending rates too have
been reduced significantly. Deposit rates of registered finance
companies and borrowing rates of specialized leasing companies too have
been reduced, and are expected to be reduced further, resulting in a
substantial reduction in their costs of funds, a communique from the
Central Bank said.
The Central Bank is of the view that there is now sufficient space
for the registered finance companies and specialized leasing companies
to reduce their lending rates, and accordingly the Central Bank expects
those financial institutions to make a commensurate downward adjustment
in lending rates, over the coming weeks.
Such a reduction would benefit entrepreneurs in industry, services
and agriculture sectors, in particular, small and medium scale