Banks to reduce interest rates on housing loans

Commercial banks have been directed to bring down interest rates on lending to restart economic activities and promote sectors with higher growth and earning prospects, the Central Bank (CB) announced on Thursday.

Addressing a virtual Press Conference on Monetary Policy Review, Dr.C Amarasekera, CB’s Director Economic Research, noted that housing loans for public and private sector staff members will have to be provided by banks at a concessionary rate of 7 per cent per annum.
The current interest rate varies from 9 to 13 per cent.  
This decision to bring down interest rates to various sectors in the engine of growth has been taken by the CB’s Monetary Board recently to revive the economy battered by COVID-19.
Local banks have also been directed to bring down interest rate on credit cards to 18 per cent as the present rates are very high running up to around 28 to 30 per cent with additional charges.    
The Board, having noted the reduction in overall market lending rates so far during the year, stressed the need for a continued downward adjustment in lending rates.
The aim was to boost economic growth in the absence of demand-driven inflationary pressures, particularly considering the significant levels of excess liquidity prevailing in the domestic money market, a CB press release highlighted.  
In order to support the economic revival, the Board decided to introduce maximum interest rates on mortgage-backed housing loans for salaried workers, while lending targets for selected sectors of the economy will be introduced in the near future, it revealed. (BS)