Commercial banks in the country have advanced over three billion cedis to businesses affected by the Covid-19 pandemic to mitigate the adverse effect and provide relief for such businesses. This was influenced largely by the Ghana Association of Bankers which is “working well with banks to have an industry strategy with a consolidated view”.
Deputy CEO of the Ghana Association of Bankers, John Awuah, disclosed this during an interview on PM Express. He added that all stakeholders including the Bank of Ghana are doing their part to improve market liquidity as financial stability in the country is key.
John Awuah noted that business owners had been given “repayment holidays” by banks as a means to support their cash flows and the availability of such funding is not just because of Covid-19.
“Banks are still reimbursing to businesses as long as they can prove cash flow payments. The banks have three billion Ghana Cedis in liquidity that businesses have been given adequate time to pay.”
John Awuah
The Deputy CEO of the Ghana Association of Bankers also revealed that the reimbursements were going to the active sectors of the economy such as factories, pharmacies, SMEs and the leisure industry. He noted that businesses in the leisure and hospitality industry had especially been affected by the pandemic and reiterated that the banks are actively helping businesses in “productive sectors.”
Some businesses have complained that they are still yet to witness any substantial reduction in interest rates on exiting loans and even fresh ones. This has led to some question the commitment of the commercial banks to respond to recent regulations. However, responding to these concerns, John Awuah maintained that banks have indeed reduced their interest rates with most corporate institutions borrowing below twenty percent and lending rates are also down by 300 basis points.
He said “Banks don’t make money from interest rates only as high interest rates leads to a high default rate. Banks don’t make money from lending but the margin”. Mr Awauh also acknowledged the role of the Ghana Reference Rate in providing a benchmark rate during this period as opposed to the disparity in rates beforehand.
Banks have also made conscious efforts to encourage customers to talk to them by reaching out to them via media platforms. Mr. Awuah made it known that banks are making sure that all customers are happy as they do not “pick and choose.” He added that lending is done with “open eyes and distributed well”
However, there are concerns that these banks are putting themselves at risk by lending out these lump sums which could cause future impairments to the banks. The Deputy CEO of the Ghana Association of Bankers admitted that they know the risks involved and there are concerns that bank and asset quality might deteriorate after the pandemic as “no one knows what will happen”.
He also described the credit culture in the country as not good as business owners tend to use loans received for business purposes for personal reasons. John Awuah however disclosed that banks were working with IFRS 9 to see to the impairments banks might face.
The Deputy CEO of the Ghana Association of Bankers, John Awuah assured Ghanaians that the banks are invested to help solve a problem instead of being the problem. He added that the Association of Bankers is stronger because of the unity portrayed in these torrid times.
