ABSTRACT
This study attempts to explore the effect of interest rates on bank loans in commercial banks with reference to Centenary bank Kabalagala branch. Commercial banks are expected to be socially responsible, support local communities and ensure equal supply of loans to all legitimate businesses and consumers. The objective of this study was to find out how far interest rates affects loan in banks. The data collection techniques adopted were use of questionnaires and documentation, where qualitative and quantitative data about effect of interest rates on bank loans in Centenary bank was gathered and analyzed. The study findings revealed that there is an effect or close relationship between interest rates and bank loans, where it was noted that well management of interest rates gives rise bank loans consumption. Finally the study ends up with some recommendations where Centenary bank Kabalagala branch should revise on interest rates to enhance the proper distribution of bank loans.