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Central Bank releases RD$20 billion from bank legal reserve

On Thursday, 27 July 2017, the Monetary Board approved that commercial banks be able to use RD$20 billion from the bank’s legal reserves to make low interest loans at a maximum of 8% interest to finance productive sectors, including manufacturing, small business and exports. Mortgage loans are capped at 9% because of the longer terms. Nevertheless, the money is also authorized for consumer loans, including vehicle purchases.

A note from the Central Bank states: “This measure will contribute to the stimulation of the economy, by increasing the capacity of banks to loan money to the private sector, which, in turn, will increase the productivity of businesses to provide goods and services national and international markets”.

A spokesperson for the Central Bank believes that through this program, many jobs will be created that will lead to an increase demand for local products, thus stimulating the national economy even more.

The Central Bank reduced by 2.2 percentage points the coefficient required for the legal reserve of banks as of 1 August. This means banks will have available an additional RD$20,423.2 million for lending.

The Monetary Board ordered that the funds be placed:
RD$4.5 billion for the export sector or 22%
RD$4 billion for the manufacturing sector or 20%
RD$1.7 billion for the farming sector or 8%
RD$4 billion for property mortgages or 20%
RD$3.7 billion for commerce and small business or 18%
RD$2.5 billion for consumer loans or 12%.

Source: DR1, Eldia

Aug 1, 2017

Category: DR News |

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Last updated January 21, 2018 at 12:31 AM
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