Commercial Banks Warned On Appetite For Treasury Bills
Bank of Uganda in unprecedented stance has asked commercial banks to get over their high appetite for treasury bills and bonds, reasoning that it’s not supporting the growth of the financial sector.
At least half a trillion shillings are raised in monthly transactions of Tbills and bonds, where government offers attractive interest rates.
Consequently diverting lenders away from the private sector, who have to deal with high interest rates on normal lines of credit.
Deputy governor Lois Kasekende who played a key note speaker at an accountants conference in Entebbe, warned that constant reduction of the central bank rate has not adequately stimulated private sector credit from banks who remain jittery on aggregate demand.