Watch – All banks in Mozambique to apply the same, single interest lending rate this year – Central Bank

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Watch – All banks in Mozambique to apply the same, single interest lending rate this year – Central Bank

7:49 CAT | 30 Jan 2017

TVM / Central Bank governor Rogerio Zandamela

The basis for calculating interest on loans in commercial banks will be harmonised this year, the Bank of Mozambique has said after reaching agreement with the Association of Banks of Mozambique.

The measure aims to enhance transparency in the market which current uses varying bases of calculation resulting in differential pricing of credit between various financial institutions.

The governor of the Bank of Mozambique, Rogério Zandamela, made the announcement on Friday, the last day of the banks 41st Consultative Council, a three-day meeting which started on Wednesday.

Quoted in today’s edition of Noticias, Zandamela explained that, to put the decision into effect, the banking system will have a single unitary index for all the interest rates negotiated between the banks and their clients.

This will mean a single prime interest rate for the entire system, Zandamela said.

According to Zandamela, the measure is part of a process of reforms that the central bank has been carrying out to create an efficient institutional platform in line with best international practices.

Speaking on ‘Challenges of the Modernization of the Monetary Policy Regime: the Case of Mozambique’, a theme discussed on Friday, officials noted that the central bank had, since 2007, been carrying out reforms to allow the country to formally adopt a monetary policy regime comparable to those in other countries, which have interest rates as their main operating variable.

Noticias writes that the establishment of a single rate will allow banking system customers a better basis for negotiations on interest rates, thereby increasing competition in the market.

A further advantage will be that any reduction or increase in lending or deposit rates indicated by the central bank will be reflected in the relationship between commercial banks and their customers, the source said.