Thursday, 09 February 2012 14:44 Mizzima News
The move follows the lowering of bank loan interest rates in January by some private banks from 12 per cent to 10 per cent, which was aimed to encourage entrepreneurs.
Burma’s Ministry of Finance and Revenue said there have been 19 private banks established in the country since 1992, with 305 branches.
The Central Bank had recently granted private banks the option of setting interest rates in the 10-12 per cent range, said an article published on Monday.
A senior official from Innwa Bank said: “We chose to raise the interest rate for current saving accounts 10pc starting from February 1.”
The Central Bank also lowered interest charged on loans to 13 per cent from 15 per cent on January 1.
A report in late January by the International Monetary Fund cited the need to expand the number of banks and the accessibility of credit, particularly to farmers.
The report said: “Modernization of the financial system should be expedited to facilitate broad-based growth. Improvements to financial intermediation should begin by phasing out the deposit-to-capital ratio and expanding the list of collateral, including to all crops. Expansion of bank networks, especially in rural areas, is essential to increase access to finance. Nurturing a stronger commercial banking culture requires price competition. Interest rate liberalization started with some freedom in setting deposit rates, and should be extended to loan products. A level playing field between state and private banks, including in the areas of regulation and supervision, is critical to promote competition.”
Allowing joint ventures with foreign banks would expedite the transfer of technology and prepare the sector for Asean financial integration in 2015, the report said.
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