Barclays Bank of Uganda has kept interest rates charged on old loans unchanged despite changes in market conditions, a top official has said.
Most commercial banks in Uganda increased interest rates on both old and new loans towards the end of last year arguing that Bank of Uganda was increasing its lending rates when inflation was on the upward trend.
Uganda's inflation touched 30.4% in October last year prompting Bank of Uganda (BOU) to raise its central bank rate from 13% in July last year to 23% in January, 2012 aiming at curbing bank credit and fight inflation. As a result, commercial banks raised their prime lending rates from an average of 20% to over 30% something that forced traders to strike arguing that their businesses were closing due to the high rates charged especially on old loans.
Charles Ongwae the Barclays Bank of Uganda managing director told The Independent in an interview that the bank's current prime lending rate is 27% and that they never thought of increasing the rates on old loans thinking it would seriously hurt the customers. "We kept our rates on old loans the same. We never wanted businesses to close," he said.
This is totally a unique decision as most banks chose to increase rates on both old and new loans because the central bank was increasing the CBR. Many (banks) are still promising to reduce as the central bank eases monetary stance.
Barclays Bank of Uganda is part of the global Barclays Group, an international commercial bank in Uganda offering retail banking, corporate banking, and small and medium term financing. The bank employs over 800 people and serves more than 300,000 customers and clients across the country through a network of over 65 ATMs and 44 distribution outlets.