Thursday, 2 July 2015

Fresh non-performing loans worry central bank in Rwanda

banksKIGALI(TOA) - After intervening to bail out commercial banks since last twelve months, over accumulating non-performing loans running into billions of Rwandan francs, there are still worries over fresh similar cases in some banks, the governor of Central Bank of Rwanda, John Rwangombwa said in a statement issued Wednesday in Kigali.

According to the statement, the solvency ratios for both banking an micro-finance sectors stood at 25.9 pct and 33.4 pct respectively by the end of March 2015.Non-Performing Loan ration for banks and microfinance stood at 6.3 pct and 7.7 pct respectively, it said.

Commenting on the current trends, the governor of Rwandan central bank, John Rwangombwa advised that the Banking Monetary Policy Committee (MPC) should identify the customers with huge non-performing loans, and review the risks posed to banks if monetary policy stance was tightened.

It was also gathered that the Committee is thinking of taking a second look at individual banks with large non-performing loans, in a bid to taking a proactive action to avoid another banking crisis.

The monetary policy commmittee of Rwanda's Central Bank is equally said to be worried by the continued drop in the nation’s foreign reserves, concluding that “there was a puzzle to be unraveled to know why foreign exchange reserves had been falling, as oil production and prices were rising."

While tighter monetary conditions could moderate economic growth, the bank believes that contained inflation is a more serious consideration at this stage than a situation of higher economic growth with high inflation.The Bank maintained the repo rate at 6.5 pct in March 2015 from 7 pct in June 2014,. the statement said. Read more...

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