The Bank of Ghana (BoG) has set the maiden Ghana Reference Rate for April at 16.82 percent, a notice released to the public on the new module for calculating interest rates shows.
According to the Central Bank, this was done in consultation with the with the Ghana Association of Bankers, that is their re-constituted a Working Group to review the existing Base Rate model and develop a new framework for base rate determination.
The objective of the review among others is to fulfil its commitment to move towards a more market-based model of base rate setting, in the medium to long-term.
The ‘Base Rate’ emanating from this model is now a Reference Rate rather than a Minimum Lending Rate for all banks as was the case with the previous model.
A bank shall price its Flexible and Fixed term loans by adding or subtracting its risk premium to the Ghana Reference Rate.
Flexible or floating term loan for any tenure granted by a bank during the implementation period will reset after each month’s publication of the GRR.
Fixed term loan rates granted by a bank in its normal course of business from the implementation date will, however, run until maturity.
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