The Bank of Sierra Leone has developed a computational model that will determine the prime lending rate of commercial banks.
The aim is to make “credit pricing more transparent and uniform across commercial banks,” according to the Bank’s press release.
“The Bank of Sierra Leone announces that with effect from 1st of March, 2016, commercial banks will compute their base rates in accordance with the model developed by the bank,” the release says.
“The Base rate is the prime/minimum lending rate below which banks should not lend to their customers otherwise it will result in a loss to the bank.”
“The model developed takes into consideration cost of funds, operating costs and a profit margin. The rate will be computed on a quarterly basis and banks are required to display the rates in their places of business and placed in at least 3 widely read newspapers”, the Statement says.