IN a bid to support savings culture in the country, Fina Bank has dedicated the month of November to promoting savings.
The Bank is promoting its two savings products—Fina Junior, a savings to help with educational fees for children, and “Fina Saver”, the flagship savings product that currently attracts an interest rate of 9 percent per annum.
“We feel this gives savers the best return they can get from their money, while still having access to it for emergencies,” Steve Caley, the Managing Director of Fina Bank told Business Times in an interview, yesterday.
According to Caley, the interest rate on savings is directly linked to the bank’s base lending rate of 18 percent.
At nine percent, Fina Bank is paying 50 percent of the base lending rate on the minimum monthly cleared balance in order to attract more savings.
“People should understand that savings is long term and a lifetime matter,” he said.
The move follows a government campaign, launched recently, aimed at increasing national savings that have been consistently negative, varying in a range between 1 and 3 percent of Gross Domestic Product (GDP).
Caley noted that savings are a key value driver of growth, not only for the banking sector but the economy too.
“We have been listening to customer demands – it is always about loans and the reality is that many of these loans are for frivolous purposes and have very little chance of being repaid. What we have to get is the general public to acknowledge that by saving, there is a way they can prepare to look at borrowing rather than just coming because they have no money,” Caley observed.
He also pointed out that savings have the potential to provide the pool of capital that the country needs for development.
According to the Banker, lack of financial literacy among the people poses a big challenge to mobilising savings.
“People seem to only save if they are made to (through salary deductions), they do not have particularly the understanding of how a financial market operates, and this is the fundamental problem, and in that saving should be a “want to” and not a “have to”- you just can not simply instruct.” he said.
One withdrawal per month for “Fina Saver” is free of charge, while additional withdraws in the same month will attract a fee of Rwf1000.
The Economic Development and Poverty Reduction Strategy (EDPRS) has set a target of achieving a gross national savings of 18 percent of GDP to attain a gross national investment target of 30 percent of GDP.