While the risk-averse nature of commercial banks’ lending policies have helped to keep the country’s financial system viable and sound in the face of banking crises in other countries, “rigid central bank restrictions” on commercial bank lending have limited expansion, the Private Sector Commission (PSC) says.
Local commercial banks have come under pressure particularly from the small business sector for what businesses say are lending criteria that invariably deny them borrowing access though the PSC, in response to a question put to it by this newspaper insists that it is mindful of the importance of the lending provisions of commercial banks, by central bank oversight, based on proper business proposals and risk assessment.
However, the PSC concedes that “rigid central bank restrictions on lending… limits the expansion of the private sector.” Accordingly, the PSC says it believes that in the context of private sector growth a development bank is still relevant today.
