Committee to investigate repo, lending rates

Sunday, May 24, 2009

Pretoria - A technical sub-committee is to be established to investigate the difference between the repo rate and the prime lending rate.

Earlier this week, Reserve Bank Governor Tito Mboweni expressed concern at the 3.5 percent difference between the repo rate charged by the Reserve Bank and the prime lending rate charged by commercial banks.

The central bank's repo rate currently stands at 8.5 percent while the commercial banks' prime lending rate is 12 percent.

A meeting was held on Thursday between Mr Mboweni and chief executive officers and one deputy chief executive officer from the country's five large banking institutions.

"The primary purpose of the meeting was to discuss the spread between repo and the prime lending rates," said the Reserve Bank in a statement.

The banks and the Governor agreed that a technical sub-committee would be established to look into the issue and other related matters further and report back to the group as soon as possible.

The sub-committee will be convened by Banking Association South Africa Managing Director Cas Coovadia and Dr Roelf du Plooy of the Reserve Bank.

Most Read

SA News on Facebook