The National Bank of Rwanda has revised the key repo rate from 6.25 per cent to 6.0 per cent, sending a signal to commercial banks to increase lending to the privates sector. The development was announced by the central bank Governor John Rwangombwa on Tuesday, following the quarterly Financial Stability Committee and Monetary Policy Committee meetings. The key repo rate is the maximum rate at which Central Bank lends money to Commercial banks. Lowering the rate creates a scenario whereby banks make more returns when they invest with the private sector as opposed to when they invest with the central bank. Rwangombwa said that the move is aimed at pushing the banking sector to extend more loans to the private sector and thus a more vibrant economy. “The reason is to further support the financing of the economy by the banking sector. We expect that banks continue to extend loans to the private sector,” he said. The financial stability committee observed that the financial sector remains adequately capitalized and profitable with the assets of the banking sector standing at Rwf2.4 trillion as of March 2017. The total banking system net profit after tax for the first quarter amounted to Rwf9.8 B.
