Uganda’s oldest commercial bank, Standard Chartered Bank has written to loan customers, indicating that it will be setting a new lending rate on 2nd September. The email did not indicate the possible direction of the change and possible factors for the change.
“This is to inform you that our Base Lending Rate will change effective 02nd September 2022,” the Bank told customers.
In the fine print, at the bottom of the message, the Bank indicated that the Personal Loans rate is a variable interest rate. And that interest rates are pegged to the Base Lending Rate and subject to change in line with prevailing market conditions.
Other costs associated with a Personal Loan include; arrangement fees, Credit Reference Bureau (CRB) monitoring and insurance fees.
According to the Bank of Uganda Monetary Policy report for June 2022, the risks to inflation were significantly tilted to the upside. Based on the worsening outlook to inflation and balance of risks, the Monetary Policy Committee (MPC) decided that increasing the Central Bank Rate (CBR) by 1 percentage point to 7.5 percent in June 2022 would be consistent with meeting the inflation objective of 5% sustainably in the medium term.
The CBR is a signal rate and generally indicates that lending rates are likely to rise to forestall a rise in inflation.
In January, the Bank launched a Repayment Holiday of up to 75 days at a reduced interest rate as low as 16% and loan amounts of up to Ugx 250 million with a guarantee to give response in 24 hours or pay Ugx500,000.
During the campaign period, the Bank announced that loans are at a discounted Interest rate of 16% p.a. for New customers, 17% p.a. for Existing customers while for USD they are at 7% p.a.
The campaign was intended to alleviate the burden and stress of back to school by making it easier on parents and guardians who are coming from the festive season and could be financially constrained due to competing priorities.
Moses Rutahigwa Head, Consumer, Private and Business Banking while unveiling the campaign had this to say; “Coming from the festive season to paying school fees while meeting other obligations coupled with struggling with the shocks of the pandemic has taken a toll on all of us and businesses alike so, to support our clients we decided to simplify for them borrowing money and give them a break, to repay later.”
He added: “We pride ourselves on being a responsible lender that responds to the unique needs of our clients in a timely manner with innovative and practical solutions. I therefore appeal to everyone to take advantage of this offer as it gives them financial flexibility and relieves their financial burdens and stress.”
Standard Chartered Bank has run the Repayment Holiday campaign over the past 8 years every after the festive period to help its clients go through the first few months after the festive season comfortably.
With this offer, the Bank says clients are able remain afloat with some liquidity to pay school fees while meeting the various obligations they may have.
Rutahigwa also pointed out: “Since we run this campaign annually, forward looking customers can actually ask for up to two repayment holidays every 12 months. Therefore, taking a repayment holiday offers financial relief and enables an individual to achieve their objectives in a relaxed, stress-free and planned manner.”