FIJI BANKS REQUIRED TO DISCLOSE INTEREST RATE

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Rule went into effect in December

By Timoci Vula SUVA, Fiji (Fiji Times, March 21, 2011) - Commercial banks will now be required to publicly disclose any increases in interest rate spreads beyond the previously regulated limit of 4 percent a year. Those banks will also be required to disclose specific reasons, including management’s stance and justifications for the increase.

A statement from the Reserve Bank of Fiji stated this disclosure was a requirement under the recently released Banking Supervision Policy on interest spread disclosure, and was effected in December last year.

"The objective of the policy guideline is to ensure banks are transparent and accountable for any increases in the interest rate spreads beyond the benchmark of 4 percent," the RBF said in a statement.

"Promoting public disclosure of financial and other relevant prudential information to foster market discipline and strengthen financial stability is important to the Reserve Bank of Fiji."

The RBF also clarified that interest spread was defined in the policy as "the difference between the yield on monetary assets and cost of average funding liabilities."

It said the definition was based on the absolute figures earned and expensed over the quarter with the balances utilized to earn interest and funding provided by depositors.

The RBF is expected to publish the first disclosures this week and future disclosures will be required to be published within a month of the end of quarter.

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