By MAIMBOLWA MULIKELELA –
STANDARD Chartered Bank has said it understands the action taken by the Bank of Zambia (BoZ) to increase the statutory reserve ratio from 14 per cent to 18 per cent effective today.
Standard Chartered Bank acting managing director James Koni said his bank believes it was within the central bank’s discretion to apply monetary policy tools to ensure stability in the financial sector.
Recently the Bank of Zambia announced an increase in the statutory reserve ratio from 14 per cent to 18 per cent as from April 8, 2015 in a bit to address the Kwacha volatility.
Various stakeholders including the Bankers Association of Zambia (BAZ) have raised concern that the move will trigger a rise in lending rates.
The BAZ and Private Sector Development Association (PSDA) separately said last week that the measure by the BoZ will result in higher lending interest rates hinder businesses in the country.
But Mr Mr Koni said in a statement issued in Lusaka yesterday that the bank believes that the increase was temporary as the central bank had indicated that they would continue to respond to developments in the macro-economic environment.
He said the cost at which clients borrow would likely remain capped at current levels and encouraged clients to take advantage of hedging services.
BAZ chief executive officer Leonard Mwanza had said lending rates would go up as a result of the expected increase in the cost of funds on the market.
PSDA chairperson Yusuf Dodia had said the development would reduce private sector investment.
He said an increase in statutory reserves ratios means that the commercial banks would have less cash to use for their operation because of the expected increase on the cost of funds on the market.
Commenting on the economy, Mr Koni said Zambia’s long-term economic prospects remains positive despite a drop in copper prices on the global market, Standard Chartered Bank acting managing director James Koni has said.
“Despite the global economic challenges, which include reduced prices of commodities on the global market such as copper, Zambia’s long term economic prospects remains positive,” Mr Koni said.
He said Zambia had continued to be one of the most attractive destinations to do business.
