Central Bank of Seychelles tells banks to loosen loan policies so economy can grow
Abel told a press conference that despite the fact that a few improvements have been seen within financial institutions, CBS is not satisfied. (Seychelles News Agency)
(Seychelles News Agency) - The governor of the Central Bank of Seychelles has a message for the island nation's banks: Businesses and individuals in Seychelles need access to capital if the economy is to move forward.
Caroline Abel told a press conference that despite the fact that a few improvements have been seen within financial institutions, the Central Bank of Seychelles (CBS) is not satisfied.
"We will have another round of talks with the institutions to make them realise that at the moment we need to align everything that reflects our economic reality. If we do not align them, we might be killing certain aspects of the economy in a faster manner as compared to how it would have happened. The banks might be putting themselves in difficulties if they do not align themselves properly with the current business model that they have," said Abel.
She outlined that given the economic uncertainty both within Seychelles' economy and globally, financial institutions tend to take fewer risks when giving out loans.
"Financial institutions are not sure if this sector will do well and provide resources to the business or individual so that they have the ability to pay back. This is one of the reasons why we see a reduction in the number of credits. On the other side, financial systems also need to recognise that within an economy that is being transformed, for the economy to get back on its feet, the private sector needs to look at innovations, do things differently which also needs a lot of financial resources," said the governor.
Abel added that financial institutions need to recognise that if the economy is to take off again, there needs to be certain financial support and failure to do so will result in a stagnant economy.
She explained that the total amount of credits in the economy covering all the economic agents - the private sector, public entities and the government - has increased by 4.78 percent. However, when looking at credits that have gone towards the private sector only, these numbers have gone down by 6.08 percent.
"Out of this, we need to take into account that with the reduction in the value of foreign exchanges, loans in foreign exchange have gone down in terms of their in value in Rupee. However, when we look at the Rupee loan, we have also seen a reduction," said Abel.