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The Commercial Bank of Ethiopia (CBE) announced that it is working to adjust interest rates on loans. State bank officials said The reporter that the final document stipulating interest rate increases of up to two percent has been sent to the Board for approval.
According to CBE’s Director of Monitoring and Strategic Planning, Meshesha Deme, the bank has been providing loans to both private and government institutions below the market loan rate.
So far, the bank has lent more than 784 billion birr to various public and private institutions at an average interest rate of 8.6 percent, while the market lending rate reached 14 percent, Meshesha said.
Addressing performance issues, the director highlighted the need for people to understand and not forget the role the bank plays in supporting the economy. It provides most of the credit to national projects, as well as to private borrowers.
Most of the money loaned has been disbursed at very minimal interest rates to support the nation’s mega and small projects, Meshesha said.
Once the adjustment is made, the bank can compete with existing banks, as well as banks that are in the process.
Additionally, the Bank is considering charging service charges on some of its services that were offered and provided free of charge or, in some cases, at low fees.
Meshesha said that in an attempt to develop savings and banking culture among people, the bank used to cover all costs and offer its services for free. According to the director, this new directive for the service charge was prepared in conjunction with the ongoing interest rate adjustments presented to the board.
The director mentioned that the bank account holder’s payment, mobile money, online banking, cash transfers, mobile banking and other bank services are provided at little or no cost. Thus, the bank is adjusting the systems to configure a minimum payment mechanism for some of its services and to make a slight payment improvement in other low-rate services.
According to Meshesha, currently, the bank’s default debt has reached 11 billion birr. In addition, he noted that the current interest rate adjustment will take into account the vulnerability of the borrower.
The bank is working to reach 1 trillion birr in assets in the current budget year. Currently, he has a net worth of around 877 billion birr.
It has more than 63,000 employees working in more than 1,600 branches throughout the country.
