The Bank of Ghana (BoG) has established a tripartite committee to investigate the determination of base rates in the banking sector to promote a level playing field for setting lending rates and improve transparency and efficiency.

This is to tackle the challenge of why the banking sector still continues to charge high interests on loans despite BoG’s implementation of complementary fiscal and monetary policies.

These have resulted in stable economic conditions and growth, holding inflation and policy rates at bay, and easing credit availability to the real sector to promote growth.

Mr Millison Narh, Deputy Governor of BoG, disclosed this in an address read on his behalf by Dr Samuel Ameyaw, Head of Monetary Policy and Economic Analysis Office, BoG, at the Third Power Breakfast Meeting of Canadian Chamber of Commerce, Ghana, (CCCG) in Accra on Tuesday.

The meeting on the theme: “Ghana’s Real Economic Challenge: Interest Rates”, was to discuss the high interest rate regime in the country and its impact on businesses.

It was attended by stakeholders in industry and members of CCCG.

Mr Narh said “We at the Central Bank have identified some major challenges to achieving low lending rate regime as the slow transmission mechanism, structural rigidities in the banking sector, and the need to intensify financial sector reforms to enhance efficient financial intermediation within the financial markets”.

“The establishment of the collateral registry and the credit reference bureaus are expected to reduce information asymmetry in credit allocation in the banking sector and in the long-run help lower the risks associated with increasing non-performing loans in the banks’ portfolio,” he said.

Mr Narh pointed out that BoG was encouraging commercial banks to explore the idea of sharing infrastructure to reduce operational costs and improve efficiency in the delivery of financial products and services.

This is to eventually lead to a reduction in the banks’ lending rates to ensure availability of more funds and at reduced costs to entrepreneurs for the growth and expansion of businesses in the country.

Mr Narh gave the assurance that BoG would intensify its surveillance activities to ensure efficient risk management and good corporate governance structures in the banking sector.

Mr Kofi Bentil, Policy Analyst and Vice President of IMANI Ghana, called on banks to stop the unnecessary competition in search of “best talent” to reduce the cost of borrowing to businesses.

Mr Bentil said charging high interest rates by banks were to enable them to make more profits to pay “ridiculously high salaries” and to poach staff members.

He called for improvement in statistics to ensure proper planning and forecasting.

Alhaji Abudulai Nantogmah, President of CCCG, said the chamber “sees access to credit as playing a very important fundamental role in building a strong private sector in Ghana in the current competitive global enterprise”.

He said CCCG was convinced that if more small businesses were able to access credit at an affordable cost, the gains could be immense.

Mrs Yvonne Nduom, Executive Chairman of Coconut Groove Hotels, who spoke on behalf of the private sector, called on government to ensure efficient and effective monitoring of the financial sector to prevent commercial banks from making unnecessary profits on borrowers.