Money And Banking

Money, Credit, Interest rate and Financial System In 2006 the reorganization of the financial system continued and reinforced. Thus, the process of recapitalization of a bank in difficulty became clearer with the discussions to handle its social capital and management to foreign investors. Moreover, thanks to the increased recovery efforts and the increase of the credit portfolio, non performing credit rate has been brought back to 18% against 23% in 2005. The total amount in the balance sheet of the deposit banks went from 675.61 to 794.39 billions Frw in 2005 and 2006, representing an increase of 17.6%. The total amount in the balance sheet for commercial banks went up from 275.83 to 353.5 billions Frw, whereas the balance sheet of the National Bank grew from 347.95 to 367.4 billions of Frw; the popular banks registering 51.8 to 73.49 billions Frw. The net result of the commercial banks grew from 2.3 to 10.7 billions Frw in 2005 and 2006 respectively, while NBR results amounted to 1.6 to 2.9 billions Frw. On the legal and regulatory aspects, the capital of commercial banks rose from 1.5 to 5 billions Frw with effect from January 2008, and the laws governing the BNR and the commercial banks have been reviewed to take into account the new developments in the sector. Following growth of credit which was stronger than the growth of own capital, solvency of the banks decreased slightly, dropping down from 14% to 13.4% in 2005 and 2006 respectively. However, except one bank that faced management problems, all other commercial banks respected the norm of 10%. In microfinance subsector, after bankruptcy of a number of micro finance institutions that were going to provoke general panic, strict measures forbidding anarchical creation of microfinance stabilized considerably this subsector. A law governing the subsector has also been elaborated and sent to the parliament. Moreover, the process of liquidation of 8 bankrupted micro - finance institutions has started with the government's decision to compensate the depositors to a maximum of 50% of their loss; the difference having to be assured by recovery exercise of the credit portfolio. Only one micro-finance institution went bankrupt during the year. As regard the monetary management, no change has been introduced in 2006. The present chapter treats monetary developments, credit and interest rates observed in 2006. * Situation monétaire (en milliards de Frw) * Interventions de la BNR sur le marché monétaire * Banks credit by sector (2005) * Banks credit by sector (2006) * New Credit by sector (thousands of Frw) * Bank credit by term, 2003-05 * Interest rates * Interest rates: monthly average