Curb High Interest Rates

The country’s financial sector is suffering a liquidity constraint, which has pushed banks and financial institutions to hike their rates of interest on loans. As the negative liquidity situation has continued on, banks and financial institutions have indicated they have found it challenging to issue loans at interest rates they had agreed before. Due to the slow flow of funds, BFIs of late have provided higher interest rates on deposits with a view to drawing more cash to them. They have maintained that they have no alternative but to boost the interest rates on loans they offer to manufacturers, businesses, and others so that they earn some profits.