baclays banks.jpgLocal banks have come under fire for their reluctance to extend long term loans to distressed firms despite performing beyond expectations in the 2011 financial year.

Local banks which performed well last year have been castigated for their failure to avail long term loans to local industry.

This comes in the wake of recent financial statements presented by most local banks which showed that they managed to make good profits in the 2011 financial year.

An economic analyst, Mr. Chris Kasiyazi says banks should play their part in the current growth matrix for the benefit of other industries which are financially constrained.

“Though banks might feel they have no obligation to provide loans to local firms, they should realise that the good performance of local industries will reap them good tidings,” said Mr Kasiyazi.

An economist, Mr. Takunda Mugaga urged banks to relax their landing rates since they are still making profits, adding that high interest rates are hindering the manufacturing sector from borrowing.

“Our local banks are rigid, if they could relax their lending terms, it could help boost the local manufacturing sector which is not borrowing as the interest rates are too high,” Mr Mugaga said.

Among the financial institutions which recorded healthy financial reports is CBZ which posted a US$30.3 million profit in 2011 up from US$18.8 million recorded in 2010.

NMB managed to also increase its profits to US$11.9 million up from US$6.8 million realised in 2010, while Stanbic had US$11 million in 2011 up from US$7.7 million recorded in 2010.

Despite these healthy profits, the impact has not been felt in the economy as financial institutions still maintain a rigid lending regime thriving on short term loans which are not viable for industry.