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Banker to Banks

No, the Central Bank does not set interest rates nor any other fees or charges required by commercial banks. The Central Bank sets only the Discount (Bank) Rate, which is the rate at which it lends to banks. Banks might adjust their Prime Rate, the rate at which they lend to their best customers, in response to changes in the Discount Rate, but the ultimate rate offered to consumers and investors is at the discretion of commercial banks; bank fees and charges are set solely by the banks themselves.

Date Rate
1974 9.50%
Apr-79 9.00%
Feb-80 11.00%
May-85 10.00%
May-86 9.00%
Feb-92 8.00%
Jan-93 7.75%
Jun-93 7.25%
Apr-94 6.75%
Jul-99 6.00%
Feb-05 5.50%
Jun-11 4.75%
Dec-2016 4.25%


The Prime Rate is the lowest rate of interest charged by commercial banks on loans to their best customers. The Prime Rate is used as a base from which interest rates on loans to the private sector are determined. Although this rate is set by the commercial banks themselves, a clear linkage to the Central Bank's Discount Rate can be observed, reflecting banks' response to changes in Central Bank monetary measures.

There are eight commercial banks in The Bahamas, two of which are Bahamian owned. These are: Fidelity Bank (Bahamas) Ltd., Citibank N.A., FirstCaribbean International Bank (Bahamas) (FCIB) Ltd., The Finance Corporation of The Bahamas (FINCO), Royal Bank of Canada, and Scotiabank Bahamas Limited. Bahamian-owned commercial banks are the Bank of The Bahamas International Ltd. and Commonwealth Bank Ltd.

A commercial bank is a bank whose main functions are to accept demand deposits and to make loans, thereby facilitating the transfer of funds in the economy. Typically, commercial banks make loans to business firms, private individuals, and government related entities. They also issue time and savings deposits and operate trust departments. Though commercial banks do not issue currency, they do issue money in the form of demand deposits, hence they have the power of creating and destroying money.

In the morning of each official business day, and under the supervision of an Officer of the Central Bank's Banking Department, representatives of the commercial banks meet at the Central Bank to exchange cheques honoured by each bank on behalf of the other. Immediate settlement of balances arising out of the mutual claims and debts is effected through a credit or debit entry on the respective banks' account held with the Central Bank. In the afternoon, a special clearing facility is provided to accommodate various inter-bank payments such as loans and repayments of loans. At this clearing, cheques are drawn by commercial banks on their accounts with the Central Bank, and are presented directly by the banks' representatives to cashiers in the Banking Department, for immediate settlement.