Board revises lending rate

Geraldine Panapasa
Wednesday, July 03, 2013

THE central bank has approved a reduction in its advance rate to lending institutions under its import substitution and export finance facility and natural disaster rehabilitation facility.

In a statement yesterday, the Reserve Bank of Fiji said licensed credit institutions, commercial banks and the Fiji Development Bank would be able to access the facilities' funding from RBF at 1 per cent per annum effective July 1.

This was compared to the 2 per cent per annum rate previously, RBF said.

"Following the reduction of the ISEFF and NDRF maximum rates to customers from 6 per cent to 5 per cent in March this year, the RBF reviewed its lending rates and decided to apply the same 100 basis point reduction to the rate at which lending institutions access back-to-back funding," RBF governor Barry Whiteside said following a board meeting on June 27.

"The decision reflects the continued downward trend in market interest rates and is consistent with Reserve Bank's actions to actively promote the utilisation of the facilities."

He said the import substitution and export finance facility had a funding allocation of $80million while the natural disaster rehabilitation facility, which expires on September 30, had an allocation of $40m.

The bank said $70m in funding under both facilities had been approved so far.

"Granting of loans is at the discretion of the commercial banks, licensed credit institutions and FDB. Eligible businesses are subject to their lending institution's credit requirements since the institution bears the credit risk without recourse to the RBF," the central bank said.