Venezuela surprises banks with cap on lending rates

Why can’t we get debt relief ?

CARACAS, Venezuela, April 28 (Reuters) - Venezuela's central bank on Thursday imposed a cap on bank lending rates and set minimum levels for deposit rates to reduce the cost of borrowing and boost savings in the world's No. 5 oil exporter. The move, which caught private banks by surprise, followed angry harangues from President Hugo Chavez that banks' lending rates were too high and should be lowered. Some analysts said imposing interest rates limits may prove counter-productive since bankers will be even more wary of extending credit and could seek even more stringent conditions. Venezuela's Banking Association, an industry group, said it was studying the measure, but was not consulted in advance by the central bank. "I hope the next decisions can be better coordinated," said Victor Vargas, the group's president. Effective May 1, the maximum lending interest rate was set at 28 percent. This includes credit cards, where some banks had been charging rates of 40 percent or more.

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