One hardly should wait for the quick reduction of loan rates right after the decline in refinancing rate. There is no direct relationship between these figures, other tools are responsible for the correlation. This was announced by a member of the National Bank of Belarus, Head of Banking Supervision Sergei Dubkov on Wednesday, September 22.
According to the representative of the NBB, there’s no direct relationship between changes in the refinance rate and loan rates in the financial market. «Correlation in the open market is undertaken by means of the National Bank tools. We judge by the current situation: the amount of liquidity, exchange rate, inflation, the total national gold reserves, foreign exchange earnings of enterprises», Sergey Dubkov said.
«The refinancing rate is an indicative parameter. The National Bank performs its open market operations, including refinancing, at various rates. These rates are public. NB refers them to the banks and the public. We estimate the state of market liquidity, in and-outcoming money value. It’s a manifold process, not a simple calculation like»refinancing rate plus 3 «, stressed the Head of Banking Supervision of the National Bank, BelTA informs.
The representative of the NBB also explained that judging by the experience, simple directive setting of the interest rates is possible in terms of growing market only. With stable or stagnant market, it is not the most effective tool.
Deposits Prevent Lower Interest Loan Rates, Dubkov
In addition, Sergei Dubkov recalled that some banks have formed a passive base, including the deposits of the population which have been involved at higher rates. «Banks have the cost of input resources, including both enterprises and foreign counterparts. Therefore, banks can not afford to cut rates more than the passive base cost as banks do not operate their money, but the money of their shareholders and depositors,» the head of the Banking Supervision of the National Bank noted.
Consequently, while giving someone a cheaper loan below the value of liabilities, the bank leaves someone underpaid, that is, causes losses. If the bank suffers loses, it leads to certain consequences. «And the consequences of the financial institutions insolvency are much more serious than simply high interest loan rates», Sergei Dubkov says.
«Banks are paying concerns. Today a limited number of banks shows the current loss-making tendency, which is open for public. But the banks are limited by the money value in the economy. You can not get a loan at 5%, without placing a 3% deposit. In our society, it is, unfortunately, believed that the loan can be obtained under 5%, and someone else should bear a 3% deposit,» the representative of the NBB said.
Sergei Dubkov noted that the main guideline of the National Bank on issues of interest policy is the main directions of monetary policy, which are taken annually. In this case, the expert added: «Interest rates on loans are reduced. They are really getting lower. Deposit rates are also reduced, as it is impossible to lower the asset rate without reducing interest rates on liabilities. But it’s painful for the people.»
«One can say to banks: remove half percent interest rates tomorrow, but this will have a short-term effect. In the medium term it means market stagnation, withdrawal of foreign resources, foreign shareholders. But foreign shareholders occupy about 30% of the Belarusian market in terms of the statutory fund. This makes 12-14% of banks’ resource base,» Sergei Dubkov summed up.
As The Telegraf reported, the president of Belarus Alexander Lukashenko said at the meeting with the chairman of the National Bank Piotr Prokopovich on September 20 that NBB should seek opportunities to reduce interest loan rates for the public. Head of State demanded the National Bank to continue providing the stable operation of the banking sector, including the foreign exchange market, exchange rate policy and lending.
