BoB gives banks free rein on lending rates
Friday, February 24, 2023 | 2110 Views |
Making moves: Pelaelo says the liberalisation of the prime lending rate will be closely monitored
The central bank argues that freeing up the prime lending rates will “facilitate market competition and fair pricing of credit and other lending products,” although the BoB will monitor implementation and “enforce good business conduct”.
Before a wave of reforms in the country’s interest regime dating back to last April, the prime lending rate, defined as the lending interest rate banks give their best customers, was pegged at one and a half percentage points above the bank rate.
Whilst celebrating milestones in inclusivity, with notably P5 billion awarded to vulnerable groups, the report sounds a 'siren' on a dangerous and growing trend: the ballooning use of micro-procurement. That this method, designed for small-scale, efficient purchases, now accounts for a staggering 25% (P8 billion) of total procurement value is not a sign of agility, but a 'red flag'. The PPRA’s warning is unequivocal and must be...