Banks agree to voluntary plan to boost corporate lending
Banks will voluntarily reduce their spreads on corporate credit over the BUBOR to 0 percent on a temporary basis, the ministry said in a statement on Monday.
The agreement covers the three-month period from Feb 1, and will remain in effect for six months after disbursal, it added.
The voluntary measure followed “intensive and constructive” talks held in the interest of encouraging market lending and to address the recent divergence of the three-month BUBOR and the three-month T-bill yield — unprecedented for a period of 20 years — which had disrupted the pricing of loans, the ministry added.
The official three-month BUBOR fixing of the central bank (NBH) was 9.30 percent on Monday, while the three-month Treasury bill benchmark was 6.84 percent.
The ministry estimated that the voluntary measure would reduce rates for overdraft, working capital and investment credit by 2-4 percentage points.