The commercial banks have been coming under pressure from the business community for not taking on more risk by extending credit to small- and medium-scale businesses, as well as start-ups. Mr. Winston Brassington made a similar call last week during a presentation titled: “Interest rate, Liquidity and Our Banking Sector” (SN: Sep 29, 2021). Mr. Brassington made several crucial points. For the purpose of this column and a few more I will write on the Guyanese financial sector, I wish to emphasise four. Firstly, the banks can expand loans by lowering the interest rate. Secondly, reducing interest rate and expanding credit would likely increase bank profitability. Thirdly, Guyanese banks are quite conservative in their lending. The persistently high liquidity levels were proffered as evidence supporting conservative lending. Fourthly, a credit guarantee system could assuage the fear banks have for not extending credit to the three classes of borrowers mentioned above.
