The bank lending rate in Ghana is the average interest rate that commercial banks charge businesses for short-term loans.
According to information on the first quarter of 2021 given by the Bank of Ghana, 17 of the 23 commercial banks now operating in Ghana require average interest rates that give them at least 5% interest margins above the average base lending rate for the sector as a whole.
Due to increased customer demand and rising deposits, the banking industry started to expand once more in the 1990s. These banks currently offer some of the highest interest rates on the continent, which is extremely beneficial for the economy of Ghana. On the local front, Ghana has more than one hundred banks that are also run locally.
In Ghana, there are now more banks than there were twenty to thirty years ago. However, our list has provided you with the most well-known banks in Ghana out of the many others. This article gave you all the details you needed to know about interest rates at Ghanaian commercial banks.
What Is Lending Rate?
The amount a lender charges a borrower, expressed as a percentage of the principal (the amount loaned), is known as the lending rate. Typically, a loan’s lending rate is expressed as an annual percentage rate (APR).
Types of Lending Rates
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Compound Interest Rate
Compound interest, also known as interest on interest, is calculated on the principal as well as the cumulative interest accrued over time. The bank makes the assumption that the borrower will still be owing the principle amount plus interest at the conclusion of the first year. The bank further expects that the borrower will still be in debt at the end of the second year, in addition to the principal, interest, and interest on interest from the first year.
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Simple Interest Rate
In the event that you borrow GHC 300,000 from a bank and the loan agreement specifies that the interest rate is 4% simple interest, you will be required to repay the bank GHC 300,000 + (4% x GHC 300,000) = GHC 300,000 + GHC 12,000 = GHC 312,000.
What Factors Determine Lending Rates?
The status of the economy is one of several variables that affect the interest rate that banks charge. The interest rate is determined by the central bank of a nation and each bank utilizes that rate to determine the range of APRs they provide. The cost of debt increases when the central bank sets interest rates at a high level. High interest rates discourage people from taking out loans and reduce customer demands. Additionally, inflation tends to increase interest rates.
Effects of Higher Lending Rate
Banks may impose stricter reserve requirements to fight inflation, or there may be a rise in loan demand. People turn to save their money in an economy with high interest rates because they get more from the savings rate. Because investors would prefer to invest in savings at a greater rate than in the stock market, which offers lesser returns, the stock market suffers. Additionally, businesses have restricted access to capital investment through debt, which causes the economy to contract.
Lending Rates For Banks in Ghana
The following banks have the highest average effective lending rates:
- CAL Bank – 15.97%
- Guaranty Trust Bank – 16.97%;
- Bank of Africa 17.19%
- Access Bank – 17.77%
- OmniBSIC Bank – 17.95%
- Ecobank Ghana – 18.41%
- Zenith Bank – 19.45%.
- United Bank for Africa – 20.05%
- Universal Merchant Bank – 20.39%
- First National Bank – 20.55%
- Fidelity – 20.64%
- Standard Chartered – 20.82%
- Stanbic – 20.86%
- Republic Bank – 21.03%
- First Atlantic – 21.23%
- Consolidated Bank – 21.62%
- National Investment Bank – 21.77%
- Prudential – 21.93%
- FBN Bank – 22.25%;
- GCB Bank – 22.80%
- Absa Bank- 23.59%;
- Societe Generale – 23.61%
- ADB – 24.89%
Banks with lowest lending rate in Ghana
The following banks listed below have been known and accepted by the Bank of Ghana as banks with the lowest lending rate in the country.
- CAL Bank – 15.97%
- Guaranty Trust Bank – 16.97%;
- Bank of Africa 17.19%
- Access Bank – 17.77%
- OmniBSIC Bank – 17.95%
- Ecobank Ghana – 18.41%
- Zenith Bank – 19.45%.
Which Bank has the highest lending rate
Agriculture Development Bank (ADB) has been endorsed by the Bank of Ghana as the bank with the highest lending rate. The banks lending rate is 24.89% followed by Societe Generale which also has a rate of 23.61%.
Read also: How To Apply For Instant Loan In Accra
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